Private money lending - from family member - how to utilize
Hey @AnTuan Adderley, if you plan to involve family members in your investment projects, I urge you to treat them like any other valued lender.
At very least, you should:
— Be hyper-specific about the terms of the loan, including interest rate, payment amount and schedule, loan duration, late-payment penalties, etc.
— Use only valid, written loan docs (note and security instrument) that fully protect them as the lender
— Give them a valid, 1st-position lien on the property at no more than 80% loan-to-value (LTV)
— Pay for a lender's title insurance policy
— Obtain property insurance that fully protects their interest
Also, I see you're located in Georgia, a fast-foreclosure state that closes with attorneys. If your investment property will be located there, your private lender will have access to swift and fairly inexpensive remedies if you default.