Private Loans

has anyone ever been on the lending end of doing a private loan?


What do you want to know about private lending?

If you are considering being a private lender your self which is what I am assuming your question is about

I Would like to share my experience and what to look for!

First and foremost what is the risk to your money and what is your ROI.

Before I consider any of my money or my several partners I would consider the Collateral first and fore most because you really will have a security instument against the property usually in the form of a mortgage note or trust deed depending on the state. So if any thing goes wrong you may foreclose or I would suggest an automatic
Deed Lieu of forecloser
in your note that way you do not have to waist time or go through the legal system depending on the state. and you could do a quick sale to recoupe your money.

Typically you do not want ot go over 70% but in some cases you can go to 80% just lok more closely to your credit risk of the borrower. I also charge some where between 10-12% simple interest which basically means interest only payments and about 4-5 points to close.
Which is a good ROI if every thing works out as mentioned.

Now You may want to consider how you are going to play with the term of the loan you may want to be a long term PI which means you give a 5-15 year note or you many want to hold your loans for only 3-12 months only you can decide that because it depends on what kind of ROI you want.

Don’t I repeat don’t get caught up in the excitement of the potential investor telling you how great the deal is until you do your due dillience, which include title appraisal( as is and ARV) I would also have the potention RE investor give you at least 3 bid on the work that is needed so that you know what you are getting it to.

hope this helps

There is a great booket published by the California Department of Real Estate which spells out the pitfalls and the profits. Go to the DRE website and look for publications.