How to Structure a hom Flipping team with Brains, Brawn and Money

[John Laney]

Hello,

I am working on the structure for a one deal team for a single family property flip in Texas.

There are three members of the deal:

1) Brains: The guy putting the together

2) Brawn: the general contractor doing the work

3) Money: Me, the guy proving ~80% of the money via a Private money loan.

Brains and Brawn are already structured together as a LLC and have done 3-4 flips in the last year or so. They are looking to bring me in as a private money lender to finance the purchase and some of the construction.

My question is, what are the ways this deal could be structured? 

My initial plan was to loan the money directly to the LLC. I would holding the house title and also have the 2 members (Brains and Brawn) personally guarantee the loan.

Is this the "customary" way to structure this type of deal? or might there be a better / cleaner way to do this?

Thanks, John

[J Scott]

This is fairly typical, though generally, you wouldn't be holding title. The LLC would be holding title. But, if that makes you more comfortable and the other two guys are okay with it, that works.