I want to make sure that I understand figuring private money correctly. Is this example below figured correctly? This is assuming no points etc... I would borrow for up to 6 months on a fix and flip and return the money once the property is sold. If sold faster than 6 months they get it back sooner. So if I can spin it in 3 months they get their money back in 3 instead of 6. If it takes 5 months they get their money back in 5 months. All scenarios they get the same $25,000 in interest just they made more per month as it was loaned our for a shorter period.
Example
$200,000.00 home purchase
$50,000.00 in repairs.
Assuming I borrow $250,000.00 in a lump sum from the private lender at 10% interest rate. I would set this up with no monthly payments for the 6 months loan term. At the end does 10% mean I then pay them back $275,000.00?
So if it takes me two months they made $12,500 per month on their money to make their $25,000?
Three months then they made $8,333.33 per month on their money?
Four months $6,250.00 per month on their money?
Five months $5,000 per month on their money?
Six months $4,166.66 per month on their money?
Please let me know if I have this figured correctly to be able to present it correctly to the private lender.
