Quote:
Originally Posted by McLovin
I'm not sure what you are proposing. Are you looking for lenders, or equity participants?
If that is the case, I agree with the others. The only grandma you'd find to stroke you a big check for the promise of that small return, and no chance of any upside, would be your own. There are so many problems with that. One would be that people's money would be illiquid for a long (at least many, many years, maybe decades, and perhaps indeterminate) amount of time. Not many would want to jump on that train for the promise of 4%, and no chance of any other upside (and uncertainty as to interest rates 5, 10 or 15+ years from now).
But your above post makes it sound like the investor has an "equity position" in the property. That, of course, is a very different scenario.
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If I had to offer grandma an equity position, that'd be fine, but I was more interested in a lender in first position (no seconds or other encumbrances on the property).
My parents have bucks just sitting in a savings account making damn near nothing. I'd pay them whatever they want, but they don't want any interest. I feel bad. I pay them back with labor, assistance, and everyday help, but I still feel guilty. I'd rather just pay an investor a set interest rate and keep it arms-length more or less.
IOW, if I had to offer an investor a percentage of the upside, I would consider it. They'd have to be silent partners.
I thought offering long amortization terms would be advantageous to grandma, so she isn't concerned about getting a pre-paid loan back and having to find another scam artist. Really doesn't bother me whether the loan term is 15 years or a 3 or 5 year balloon.
Many thanks to the responses. This definitely helps.