Borrowing $100k from a friend to invest??

[Aaron L.]

Hi BP! I'm putting together a proposal to raise funds for a downpayment. I'm hoping to raise $100k and then use it as a 20% dp for a small multi-family property. My proposal is to borrow the 100K at 10% interest for a 5-7 year term.

My proposal includes:
-some examples of properties so the potential investor can see what type of buildings I'm looking at.
-some research on the economy where I plan to invest.
-my experience buying/managing rentals.
-my credit history.
-I have money set aside in an account for reserves which I can show the investor. However, I'm hoping to raise the entire 20% dp needed.
-a breakdown of how much money the investor will make over the life of the loan.
-My plan is to pay back the $100k in 5-7 years or less from the cashflow that the property generates. I will have a detailed schedule of how this will happen based on the cashflow.

Can anyone chime in and let me know their thoughts on this strategy? Are there any dangers/risks I'm not seeing? I'm hoping to keep this investor as strictly a debt investor, not an equity investor, but I'm open to structuring the deal in whatever way makes sense and creates a win-win scenario.

The investor I'll be talking to is a 65-year old high net worth individual who is a personal friend. He has absolutely no desire to manage real estate or be involved with any of the headaches that come along with searching for properties, rehabs, etc. His role would be totally passive.
I also have a list of 5-6 friends who I can approach for funding as well. Not sure if they will say yes, but I want to give it a shot

If you actually read this far, thank you! I welcome your thoughts & criticism.

[Todd Dexheimer]

Just make sure you do this the right way. Get an attorney involved so that your money partner is well protected and make sure you are 100% looking out for their best interest and not yours. Your goal should be to make them money. If you do that, you will make money.