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4 posts by 3 users
I have been in contact with a large local real estate investor, and he builds a list of people willing to lend money privately.
He contacted me regarding a short term loan at 10% for 30k.
I've never lent money before, but what do I need to look for and do to protect myself in the event I do lend.
Thanks
-Terry
Be sure you independently establish the property value. Have the borrower pay for an appraisal, but YOU choose the appraiser.
Stay below 65-70% LTV.
Stay in first position. A 30K loan sounds like a second to me. You don't have to read very long to learn seconds have almost no value. First position or nothing.
Record the mortgage or deed of trust.
Do a full title search. Do the transaction at a title company. Require a lenders title policy purchased by the borrow for your benefit.
10% would be a very good rate for your borrower.
Jon Holdman, Flying Phoenix LLC
Jon, yes he establishes a list of private lenders so that he does not have to pay points and saves on the spread.
I am in first position, its for a REO acquisition at roughly 27.5k.
I do not have any relationships with appraisers, but will try to find some thorugh some contacts.
Thanks
-Terry
All of what Jon said is great info. The only thing that I would add is to make sure that the borrower (buyer) gains insurance on the property in case of fire/vandalism showing you as the lender/lein holder. Might also want to cosider a Assignment of Rents agreement signed by the borrower at settlement. That would cover your interest in case the borrower collects rental payments from the property but does not pay the mortgage.
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