Examples of Private Loans

Overview

Private loans provide customized financing solutions for real estate investors, allowing flexibility in payment structure, term length, and cash‐flow management. Below are three illustrative examples, detailing their key terms, use cases, and comparative analysis. 

1. Fully Amortized Fixed-Rate Mortgage

Key Terms

• Loan Amount (Principal): $100,000 

• APR: 4% 

• Monthly Payment: $527.84 

• Loan Term: 30-year amortization, 10-year balloon 

• Principal Remaining at Maturity: $71,358.95 

Description
Ideal for long-term rental holds, this structure keeps payments level while gradually shifting from interest to principal. The 10-year balloon requires payoff or refinancing at maturity. 

2. Interest-Only with Monthly Payments

Key Terms

• Loan Amount (Principal): $100,000 

• APR: 6% 

• Annual Interest: $6,000 

• Monthly Payment: $527.84 

• Loan Term: 3-year balloon 

• Principal Remaining at Maturity: $100,000 

Description
Best for short-term rehab or renovation projects. Only interest is paid monthly, preserving cash flow until the 3-year balloon, at which point principal is due or refinanced. 

3. Interest-Only with Accrued Interest

Key Terms

• Loan Amount (Principal): $100,000 

• APR: 8% 

• Annual Interest: $8,000 

• Monthly Payment: $0 

• Loan Term: 12-month balloon 

• Principal + Accrued Interest at Maturity: $108,000 

Description
Optimized for fix-and-flip strategies, this option defers all payments until maturity. The higher rate compensates the lender for no periodic payments. 

When to Use Each Loan Type

• Long-Term Hold: Fully amortized fixed-rate for consistent cash flow and gradual equity build-up.

• Short-Term Renovation: Interest-only with monthly payments to reduce carrying costs during rehab.

• Fix-and-Flip: Interest-only with accrued interest to defer cash outlay until sale proceeds are realized. 

Conclusion

Selecting the right private loan hinges on your project timeline, cash-flow needs, and exit strategy. Use amortized loans for stability, interest-only options to preserve liquidity, and accrued-interest structures when you plan to exit quickly.