Private Money Structuring Advice

I am an appraiser and Realtor and have some friends and family with $. Looking to approach them to invest in fix/flip properties which I will locate through REO listings, county auctions & 3rd party auctions. I will also take care of rehabbing and selling.

Cash offers will be the best option and in some cases the only option. What is the best way to approach them with the oportunity and to structure the deal so it would be beneficial to all parties involved? I would like to avoid an equity partnership if possible and strictly use them for financing.

You could look at the terms and rates from hard money lenders and private investors and compare them to conventional financing. Friends and family financing might come somewhere in the middle.

HML make short-term loans at above market interest rates - often double-digits. They also charge upfront points - which is where they make much of their money.

Transitional lenders - for wholesale deals - lend money on usually less than a 24 hour basis. Just enough time to do a double close. Often they charge 1.5 - 3% of the amount borrowed as an upfront fee.

That should give you an idea.