How would you invest 200k of private money at 10% interest?

[Hannah Hammond]

Someone who I am close with wants to partner in real estate and is willing to private lend up to $200,000 at an interest rate of 10%. I have plenty of landlord experience in single family homes, but have not yet owned any multi family homes or done any fix and flips. I have done a ton of research on both types of investing, but am not completely sure which is the best place to jump in. If you were in my shoes, how would you invest the money? One large value add multi family complex? Residential home fix and flip? A couple of smaller value add multi families? There are so many options, I am not sure which would be best to start. I would prefer a decent size multi family with good cash flow and room to add forced appreciation, but I would really appreciate your thoughts and opinions! Thank you :)

[Jeff Rabinowitz]

Do not take the money unless you have a place you are comfortable using it, are sure you can cover the repayment, and are comfortable testing your relationship. It isn't just a higher yielding investment that you need. You must be comfortable with the repayment terms. Will your lender expect monthly payments, quarterly, ....? Will they be comfortable with no payments until you complete and sell a project (if you are doing a rehab/flip)? If they want payments will those payments be interest only or will the principal be amortized? If amortized, over how long--how large will your payments be? Make sure any loan you take fits your project and your plans.

Oh and you don't have to take the whole $200K at once. It may be advisable to borrow a smaller sum for a short period to make sure you will like partnering with this lender before making a large commitment. It is often a shame when a close relationship gets strained or worse over business misunderstandings. Make sure you discuss and write down as much of the details and terms as you can to avoid harming the relationship if the business does not go as planned.