Holland, MI · Member since 2017 · 20 posts · 0 votes
I have a private lender or investor, I am not sure what to call him, who has agreed to put 10% down for a 20% ROI paid out in 1yr intervals. I have two questions in regards to this:
1.) What type of lawyer should I get to draw out the contract and what is the estimated cost of hiring the said lawyer (I know it varies just a rough estimate would be nice.)
2.) How should this be classified is it a loan, an investment? Or even a partnership I highly doubt it would qualify as a partnership as all the lender is doing is lending the money.
My issue with calling it a loan is it isn't calculating out interest, as it is a one time calculated 20% paid back on top of the original invested amount.
Yes, that's a loan. The loan amount is $16,000. Payment is $3840, paid annually. It amounts to an annual percentage rate of 2.86281%. Great deal for you!!!
This is a loan, but either you haven't told us the complete set of terms, or you haven't set the rest of the terms. Either way, it's still a loan, but depending on the terms as of yet not divulged, this is either a great opportunity...or you're holding a stick of dynamite on a short fuse.
I was only going to calculate the 20% 1 time. Let me throw in my numbers and see if you still feel that it is a loan. So the initial investment is 16,000 so I plan to repay the 16,000 + 20% for a total of 19,200 broken down into 5payments spreadout across 5yrs with each payment being 3840. Would this still be considered a loan although the interest is only calculated that one time and never again during the life of the loan?
Yes, that's a loan. The loan amount is $16,000. Payment is $3840, paid annually. It amounts to an annual percentage rate of 2.86281%. Great deal for you!!!
@Joe Villeneuve The loan is directly to me. How do you figure the loan is a 4% flat rate instead of the 2.86...% that Jon was saying it is? I don't understand how you came to that conclusion.