Mark Kohler walks through the core parts of a private lending deal: the promissory note (amount, interest rate, term, repayment schedule), how points work as upfront fees, and why you need collateral or personal guarantees to protect yourself. A note alone isn't enough.
And let's go up to the lending. So I cut a deal with Matt on the lending. What does that actually look like? And let's kind of summarize those pros and cons. When you borrow money from someone you are going to give them a note, a promissory note. I promise to pay you back X under the following terms. The number of months, the years, the percentages, yada yada. If I borrow 100 grand, 2 points means I'll give you 2 grand just to get the deal done and then I'll give you 10% per annum which might be around 9% per month. And when is it paid? Is it paid in a balloon at the end? Is it paid monthly, quarterly? Who knows? So that's what's in the not. And then in turn, what Matt's going to want with that note is some security, some guarantees that he's not going to get left holding this piece of paper worth not.
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