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How do I legally invest into this Real Estate flip?

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limpidmind

Junior Member
I know someone who is currently rehabbing a property and has run out of money. He is looking for an investor with $25K to finish the project and is offering $25K in return (double my investment).

I have looked at the comps and it looks like a great opportunity but I am not sure how to proceed. I want to make sure I handle our partnership legally and protect myself as much as possible if things go south.

I'd thought I'd see if anyone could offer some advice before I seek out an attorney.

Thanks :)What is the name of your state (only U.S. law)?
 


HuAi

Member
The rehabber can sign a promissary note and you place a lien of $50k on the place - essentially a second mortgage. Your lien will be behind any primary mortgage, so if the place doesnt sell for what you think it will, you may not be able to collect.
 

FlyingRon

Senior Member
If he liens the property, it will be near impossible to sell the property without him removing the lien, he doesn't even have to worry about priority until whoever holds the first note comes to foreclose.
 

tranquility

Senior Member
There cannot be a note as then we would be talking about interest and not an investment. Unless we're talking about holding the property a lot of years, we would have usury.

This would have to be a true partnership with the agreement spelled out. See an attorney.
 

HomeGuru

Senior Member
I know someone who is currently rehabbing a property and has run out of money. He is looking for an investor with $25K to finish the project and is offering $25K in return (double my investment).

I have looked at the comps and it looks like a great opportunity but I am not sure how to proceed. I want to make sure I handle our partnership legally and protect myself as much as possible if things go south.

I'd thought I'd see if anyone could offer some advice before I seek out an attorney.

Thanks :)What is the name of your state (only U.S. law)?
**A: I would not do the deal.
 

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