First Time Fix & Flip Partnership/Personal Loan Questions

[Jay Martin]

Hello everyone! This is my first post on this forum after having learned of Bigger Pockets a few weeks ago through the Real Estate podcast.

My wife and I are interested in doing our first ever fix & flip in the Eugene, OR area with very little capital to spare. I am a residential remodeling contractor by trade with a solid understanding of the rehab process and a network of laborers and subcontractors that I can rely on, and thus plan on managing this first rehab myself.

 We do not have enough capital for a significant down payment OR construction costs and so we are considering asking family members for a personal loan OR proposing a partnership. My thought was that we would ask for the money for down payment in the form of a “gift”, and then do all of the work of finding and purchasing the right property, budgeting and managing all of the renovations (and doing most of the labor ourselves), and selling in the span of 4-6 months. 

I have several questions to answer before writing a proposal and would greatly appreciate any advice whether broad or specific:

-What are the advantages of a partnership with a pre-determined percentage of profits shared VS a personal loan with a fixed interest rate?

-What percent profit or interest on a personal loan should I propose to my family members to begin negotiations? What would YOU want to see as an investor from a family member asking for help in this way?

-Would it be better to ask for the down payment loan and construction loan from the same party, or are there any advantages to seeking loans for renovation costs elsewhere, such as HMLs or even credit cards?

I would love any other advice even if not directly related to my questions.

Thank you!!!

[Katie Cianci]

Thanks for this question! I have the same question how to do this.