Hi all,
My father and I have agreed to be partners in the fix-and-flip business in the DC Metro area, more specifically Montgomery County, MD. My father is a long-time contractor (50+ years) and can handle the rehab estimates and purchasing of materials. On this particular FIRST home, him and I will probably be doing the work ourselves (aside from carpeting, granite countertops, HVAC). Eventually and hopefully not too long from now, we want to use subs for everything except the simple handyman work and have my father act as the GC.
Now, back to the topic. My father's very good long-term friend will be our private investor. He is on board 100% and is willing to provide 100% of the funds for not only the purchase of the "distressed property", but also 100% of the renovations for the "distressed property".
Now, I have done my reading on promissory notes and the deed of trust. From my understanding the promissory note basically is a legal contract that states the terms and conditions of what, when, and how we will pay him back (this could be 8-12% annualized return, or no interest at all and just pay him 50% of the net profits at the end, or something like that?)
How do other private money lenders do their deals? If we could get the investor to buy the house in HIS name instead of giving us a loan to purchase, then he pays for the materials and pays us to do the work, then give us half the profit at the end when it is sold, would that be beneficial to us since all liability is taken away on our part? I suppose you might say why would the investor agree to give you half the profit at the end if he takes all liability. Well, I would say because he gets to sit at home watching tv while we are the ones making sure everything is done on time, done on budget, and done correctly.
I am basically asking for a starting point as to what to bring to the table when it is time to get the investor documents going.
Thank you in advance for your response to this long inquiry,
Tyler Fers
