I currently rehab properties and sell them for profit. Recently, my name has been given to a few investors who want to invest and partner on upcoming projects with myself. They strictly want to invest their money and do not want to participate in the work. They are asking that I put together a business plan outlining what their returns would be on properties that they would finance. Historically, I have been using my line of credit that I established at a local bank. However, I am handicapped, because my LOC can only take me so far.
My question is, “What is a reasonable return to a private lender?” In addition to interest on their money, do they expect a percentage of the profit and if so, what seems to be the “norm” if there is such a thing?
I want it to be a win/win for both myself and the lender. I would appreciate any assistance that anyone could give.
Good for you,
I offer a bonus for the investor to open his check book . Depending I how bad I need the deal will depend on the amount I offer, from 3-5k per deal then 10% per day for as long as I have the money.
This all could be stated another way, but this is how I offer it. I have 3 guys who can’t wait for me to call with a deal. I do not keep the money more than 90 days and when repaying I round up on all numbers as an additional bonus.
The three accept a prommissary note only. Versus going on title, had already proved my self in the biz so that worked for them, less paper work for them which they prefered.
Where can you find people to invest in your homes? I am willing to give 50% of the profit for 100% financing and I do all the work, all they need to do is finance, then when sold get back there money and 50% of the profits.
From your other postings you stated that “as long as you are self-employed with the right financial documents in place” that you have no problem with financing, and you also said that credit was not needed with the righ documents in place. Then here you are asking for help in locating someone to help you find financing. I don’t mean to dog on you, but which is it?
I appreciate your responses. I have been approached by a real estate developer looking to diversify his portfolio. He currently develops land, but is looking to make a return on other funds that he has available. It was a referral from someone I know.
When you are splitting your profits 50/50, do you also pay interest to your investor throughout constructions and/or pay your investor any points upfront?
I would do points and interest OR 50/50 but not both. He’s already getting 50% of the profit, I wouldn’t give him interest or points on top of that. Heck at 50% of the profit he’s probably getting a bigger cut than an HML, not sure why you don’t just use an HML and keep a bigger peice of the pie.