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Updated over 3 years ago on . Most recent reply

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Frank Teshima
  • Investor
  • Maui, HI
20
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59
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Using Private Money For Deals

Frank Teshima
  • Investor
  • Maui, HI
Posted

Hey fellow BP members, I have a private lender that has quite a bit of equity in their home. I found out about it and approached them with an opportunity to put that money to work. I told them that instead of taking my business to the bank, ill do business with them. My plan is to buy a residential multifamily property, using private money, pay them exactly how i would pay a bank. and in order to add value, I would fix up the units, raise rents, and then refinance with a bank, pay off the private money, and just recycle the private money. 

With that being said, first of all, is this similar to what people do? and how do i structure it? if possible, could someone share what their terms are with their private lender. Any experiences and tips are welcome!! Thank you very much for the help!!!!

Most Popular Reply

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Andrew Syrios
  • Residential Real Estate Investor
  • Kansas City, MO
4,978
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10,288
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Andrew Syrios
  • Residential Real Estate Investor
  • Kansas City, MO
ModeratorReplied

Yup, that's basically how you should approach doing a BRRRR deal. You should probably talk to an attorney, but we get a 1st position deed of trust (or mortgage depending on your state) and offer a personal guarantee. We also make sure to list the private lender as the lienholder on our insurance. And we always close those loans at a title company just as you would with a bank loan. That way the private lender knows there was a title search, there's title insurance on the property, they are in 1st position and their lien was actually recorded.

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