All Forum Posts by: Vitalii Lunko

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $55,000
Cash invested: $65,000
Sale price: $140,000

First complete renovation all but reframing--new electrical, HVAC, plumbing, complete bathroom and kitchen demo and remodel. I outsourced many different local vendors and received 2-3 quotes for each piece of work. Lots of learning! Decided to BRRR instead of sell based on higher ROI to keep. I can't wait for the next one and to share my experience for anyone who is interested.

@Tito Taiwo  From the sounds of it, this is going to be an unsecured loan (meaning your loan will not be secured by the hard asset - i.e. the property).  Real hard money loans do not use "Investor Agreements".  That sounds more like some document your friend typed up or downloaded off the internet.  

I know you say you trust your friend, but unless you can afford to lose that $10k (and your friendship), you really should be doing this the proper way.  

There's already post here with a response a few down that covers the types of forms that you should be using: 

https://www.biggerpockets.com/forums/49/topics/413352-private-lender---forms-required

Typically, the lender (you) provides the forms after their attorney drafts them, but the borrower (your friend) would pay for the cost of doing that.  

Honestly though, this sounds like a pretty risky transaction.  Not only are you new to lending, but - even if it was a secured loan - I"m guessing based on the amount it'd be in second position.  

Everyone goes into the deal with the best of intentions, it's when the road gets rough that things get tricky.  If you don't have your paperwork in order going into the deal on the front end, you'll regret it later on if/when that time comes.

A rental estimation is never going to be perfect so that really shouldn't be the expectation.  In fact, the whole point of real estate investing and generating returns should be to make investments based on an advantage (knowing a good deal in the market, etc.) - if there was perfect information easily available to everyone - no individual mom and pop investor would ever have a chance at real estate investing returns at all...