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Private Money Loans Subscribe to Private Money Loans

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· Martinez, California


This is what I need help with. I am trying to purchase properties using Private Money(not hard money loan) in CA.
First, I am trying to find a good note template for a private loan specifically used to purchase real estate(I don't know if that matters, but most of the templates/samples I have looked at aren't structured in the way people have described them to me). I would like it to last for X number of months at Y annual interest and it would allow me to pay back the full loan at any time. It would also provide the purchased property as collateral, if I default on the loan.
Also, I don't understand how the loan would be execute, I mean specifically, How does the money get from the lender to me, and from me to the purchase of the property. As I understand, it all happens at the closing of the property. But, that is about as far as my understanding goes. How should the purchase be structured? What needs to be in the purchase agreement to tie it to the loan note and to protect me and my lender.
This is a little more general to my overall strategy, but I plan on using one of these three exit strategies after purchasing the property: Flip, Rent, or Lease Option. I am targeting SFR/Condos within 60k-100k price range.
If there is anything else I might be missing, please tell me.
Thank you so much,
Nicholas Spinner


Real Estate Investor · Wheat Ridge, Colorado


The mechanics are simple. Almost all real estate transactions involve a loan, so this is a well understood process.

A title company handles the process. There are three parties, buyer, seller, and lender. The buyer and seller agree on the sale and formalize that with the purchase and sale agreement. That goes to the title company. The buyer and lender agree on loan terms. There would typically be three documents involved - a deed, a deed of trust and a promissory note. The deed is granted by the seller (grantor) to the buyer (grantee) and conveys ownership. The deed of trust is granted by the borrower (buyer aka grantor) to the lender (grantee) and gives the lender a security interest in the property. Both of these get recorded with the county. The promissory note is between the buyer/borrower and lender and spells out the terms of the loan.

A title company might have samples of these document. You might be able to find them from another investor, though I would find someone who's done similar transactions in your area. You can also have a lawyer draw them up. Deeds are quite standard, deeds of trust and promissory notes less so.

All the docs go to the title company. The lender wires the money to the title company. You wire or being in a cashiers check. The title company completes all the paperwork (there will be a bunch of other docs, most likely) and passes out checks.

Small_flying-phoenixJon Holdman, Flying Phoenix LLC


· Stockton, California


Nick,

I'm aligned with a national direct lender who deal a lot using private money...If you want, email me and I can send you some information on a program I think may be up your alley. The question I have though, are you coming in with anything? Info is in sig. Thanks.

Jared Rine


Real Estate Lender · Chicago, Illinois


Honestly? You want to know if you are missing anything? This scares me that you are trying to be a Real Estate Investor with someone else's money but haven't got the first clue as to how a real estate transaction works. You are missing more than I can write in this post.

Please stop watching infomercials on late night tv that tell you it is easy and anyone with no experience and no money can do it.

If you want to be successful in this, you are going to need to spend some serious time educating yourself about the business.
Does your lender know you don't have any idea what you are doing?

As to your question, Fannie Mae has notes and mortgages for download on their website.


Hard Money Lender · Eagle Mountain, Utah


Eric makes a good point. It is very crucial especially in the world today to know what you are doing when investing with other people's money. There is far too much fraud going on out there still and it is a very dangerous place to get involved if you don't know what you are doing.
I have done a lot of private investing in the past and got taken on a lot of money with the fraud that happened in 2007 and I knew what I was doing. Unfortunately I also knew better and made stupid mistakes.
One of the most important things I think you need to be willing to do is consult an attorney and setup your business correctly. If you don't have the funds to work with a good attorney then you should not attempt such investing. Do it right or don't do it at all and don't do it if you feel that maybe you should not.


· Martinez, California


Thank you for your help. Upon reading you reply Eric, my first response was to try and just verbally bash you, but I understand why you are saying what you are saying. Instead, I will just tell you whats up. I found two real estate agents in my area who specialize in investment properties and have been for a couple years. They are married and the wife is also a Mortgage broker. I also have a contractor who has agreed to help evaluate properties, at least initially, he is also a real estate investor himself. I am assuming that they can help me find a good deal in my area, because they have already shown me many of the current projects their clients are working on. I am also assuming that they fully understand the closing process, to every minute detail and that I will have a much better understanding once I participate in one. What I didn't want to assume was that they know what a private money loan is and that a private money loan is basically the same as any other loan, as far as closing time is concerned. I hope that settles your stomach a little about my ventures.


· Martinez, California


I am also assuming that I am not committing fraud.

I will have the property under contract before soliciting investors. That should provide legitimacy.


Rehabber · Howell, Michigan


Your a bigger man than I Nicholas! Man that guy need to learn some manners...Geez


Real Estate Lender · Chicago, Illinois


Nicholas, you are "assuming" alot of things. Is that really the best way to go into business?
We all know what happens when you assume.
You might think I need more manners but I am simply telling you the truth. Verbally bash me all you want if you don't like my advice. Doesn't matter to me. But I don't think a single person on this site would say that you are properly prepared to go into this business.
Sorry, but this is a disaster waiting to happen.

Good Luck
Eric




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