5 Tips how to write a contract

1.Put down everyone’s Full Names.
2.Terms of Loan.
3.Write in Bullet Points what to Expect from both Parties.
4.Have a Pre-Pay Clause or a Late Fee Clause.
5.Have it Notarized.

When I first started out learning about business and Real Estate Investing I knew there was going to be a lot to learn. As I was putting my first loan package together, so I could present it to my private investor, I realized that it is very important to have a contract/promissory note in place. I figured, that with all the contracts and paperwork I had, I could just use one of those. Going though all the papers I realized that none of them were going to work for this particular deal. That is when it all started. I had to write it up myself!

At first I sat there staring at the blank screen for what seemed like hours. Okay, so it was only 15 minutes but it felt longer. I just started typing what I expected form the private investor and what he should expect from me. Next thing I know I had put together my first contract. Now it wasn’t the best contract but it was a contract.Over the last few years I have had to write up a lot of contracts because every situation is different (and I really like doing it)!
Lets cover the details:
1. Put down everyone’s full names. It is very important to have everyone on this contract even if it is a business name. You can do something like this. John and Mary Smith known as Smith Investments LLC. Then through out the contract you can use their company name.
2. Terms of the Loan. Make sure that you put down all the money in writing. You want everything included such as amount borrowed, rehab/fix cost, percent, points and/or anything else that has to do with the loan.
3. Bullet Points. This is the Most Important Step!!!! This is where you are going to put all the details of the transaction. If you are writing the contract I highly suggest writing it from the other person perspective. Then go back to write from your side. I suggest email it over or meet up with the person and ask them if they would like to see anything different. This is how you will build a strong relationship with the borrower or loaner.
4. Make sure to add in your contract a pre-payment option and a late payment agreement. This is so important that I gave it its own step! Even if you are the borrower! Again be very specific with this. You don’t want to put yourself in a situation to where there is a penalty or they try and skip out on you if you’re the borrower.
5. Have the contract notarized. This will also help you and the other person feel more secure knowing this has been approved by 3 party and is a 100% legal document that bonds the two parties together.

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