Looking for ideas to repay private lender.

[Billy Farley]

Hello BP community!

I am looking to start a business that does flips and acquisitions of buy and holds. I am a real estate agent and I have a contractor that wants to work with me on a flip. I would like to do the first without any money if possible. 

I am thinking I can find the private money lender and offer repayment in full of his loan and then 40% of the profit of the flip. Myself and the contractor would take 30% each. I would also want to keep my sales commission and would write that in the contract. I have an LLC that I would title the property durning the flip. I will then use the private lenders money to secure a hard money loan to finance the whole deal/rehab.

Does this look sound enough to pull off? If you have anything that would be constructive, please input!

[Alex Breshears]

Hi William! As a private lender I wanted to chime in on this to help add some value.

First, finding a private lender that would be willing to lend up to 100% of everything needed may not be viable in the current lending environment. If you sound an amazing deal and all in you were at like 50% LTV, then maybe, but otherwise lenders are going to want you to have some skin in the game. Also, a lender will want to be on the debt side of the equation - meaning regular monthly payments while the loan is outstanding. If you are curious how to repay them entirely, that would happen once the property is sold, and then the lien is paid off and a satisfaction of mortgage (in a mortgage state) would then be filed to show the lien was officially satisfied. The other option is doing a refinance, which the same process would still apply only it would be your lender and not the borrower's lender that paid off the private loan.

I would suggest learning a bit more about private loans before approaching someone about lending. There are a lot of considerations that need to be made to do this legally and safely. I happen to be one of the authors of BiggerPockets private lending book, and I live in VA! So happy to help.

The link to the book is: https://store.biggerpockets.co...

While the book is geared to show someone HOW to do a private loan, it acts as a sneak peek behind the curtain for active investors for what lenders want to see. You can then create your own private lending army because you will be the knowledge leader in your network on how others can invest with you but still protected.