I seek your thoughts: loan in return for architectural service

[Paul Kouri]

I would love your opinion of what I believe may be my unique "unfair advantage" and a proposition I made to a client.

THE FACTS:

. I am an architect

. I have access to financing (excellent credit, good debt-to-income, and ample liquidity in IRA's)

. I do NOT have much cash for a 20%-25% down payment (due to a significant renovation of our primary residence for ourselves)

THE BOTTOM LINE:

. To acquire more SFR rentals, I seek cash.

THE PITCH:

I am doing an architectural side project for a local developer. In lieu of direct payment for my service (roughly 15 hours of work, $1,000 fee), I asked for a private loan to use for a downpayment on a SFR in order to buy, rehab and rent/hold.

He agreed to loan me up to $12K for up to 1 year with a return, lump sum payment of $13K.

Do you think this is a good deal?

For two additional sources of cash, 1) I seek to ask for the same $12K loan from another developer I know personally in exchange for architectural service and 2) I am considering taking $5,500 from my Roth IRA.

The strategy is that after the purchase, rehab and refinance, I pay back the two $12K loans with $26K and open a Roth for my wife for the $5,500 maximum contribution and have a new rental with positive cashflow.

The only missing piece is finding the property at the right price for the numbers to work.

I greatly appreciate your thoughts. 

Sincerely,

Paul