Private Lender Terms

[Cristen Bozeman]

Hi All,

As a newbie RE investor. Can someone share insight on a standard or common structure for loan terms when you are a private lender? Please share resources as well so that I can continue to learn independently.

Thanks in advance!

[Jeremy C.]

Let me share the arrangement I am doing with my PML. I do not think this represents the majority of how others structure their deals, but that’s the great thing about PML-you agree on the terms. 

He is a mentor of mine as well, and is not so interested in making money but rather he told me that he likes to see 7% in his passively invested accounts, so I offered and he accepted that I would pay him 8% APY On the principal that I borrowed. 

I.e. if I borrow 100k for a BRRRR (purchase plus rehab) and borrow the money for 9 months (purchase and 6 month seasoning before cash-out refi) he is totally fine with me giving him a lump sum after 9 months of $105,941.

I think these kind of terms are very relationship-based, but try and see what they are open to!