Help with some questions from a Private cash lender

I have been advertising for a cash money investor and have someone interested. Please help with his questions he has asked me. Here there are:

I do not have an IRA but I have cash that I can invest.

Some more questions about the process.

1. What amount are you looking for ?
2. Do you also invest some money in the house that is being bought ?
3. Will you pay 12% intrest irrespective of the fixxer upper’s selling price ?
4. When is the intrest paid, every month or one lump sum at the end of 6 months ?

Also, do you have any properties in the pipeline that you are intrsted in buying ?

1.) I assume you have an idea about the type and cost of property you want to buy
2.) Good question. What is your answer?
3.) I would think the answer would be “yes” don’t you?
4.) Ask for the “lump sum” but expect the monthly. Acutally I believe the monthly is better as it helps avoid surprise endings.

Yes , I do have an idea about the properties I will purchase.

#2 Do you think he means if I personally invest my own money or is he asking if I use some of his money to fix-up properties?

#3 So if the house is say $300,000 but I sell at $390,00, I should give him 12% of the selling price, right.

#4 How would I figure the monthly interest rate?Should I give him the option to choose monthly or one lump sum?

This was my reply to investor. Let me know what you think.

The amount will depend On the fixer that is purchased. Also depends on how much you have to invest.

I want to build long lasting relationships with private lenders like yourself to make money for you and me. When I structure an offer on a property, I make sure that it is below market value enough to cover profit, loan, interest, fix-up cost, and seller fee’s when it is sold.

Sometimes I will find home’s that are in move in condition to sell for an even quicker profit. I am working on one of these right now. Homes in this area are selling within in days of listing. I need to research further. Seller is moving to Arizona. Could stand to make a nice profit if the deal is negotiated right.

Yes, you will get 12% of the selling price.

I would prefer to pay in one lump sum when the home sells.

When you are ready to start making money; I will start purchasing home’s.

I think you missed the boat wth him.

He wanted to know the price range you wanted to buy

He wanted to know how much of you own money you would be putting into the deal

He wanted to make sure he would make 12% annualized interest on his money regardless of the sales price (NOT 12% of the deal). This is a loan!!!

You told him he would have to risk everything untill the house sold.

Would you take this type of offer if you were in his shoes?

Rob

So basically I should of told him regardless of the selling price he will still make his 12%.

Also should of told him a dollar figure range on what I wanted to purchase.

Let him know I was not going to use any of my own money, but how would you suggest answering this good question.

Is this about right?

Yes to all of your comments. Also I would suggest telling him you will pay all closing costs and 2%-5% of the purchase price, insurance etc.

If you can’t afford to pay these expenses you can’t afford to be in this biz.

Good luck!