What paperwork to look for what starting as a money lender

Question

Hi,

I am a small investor and i am very new to BP. I currently own 2 properties in the dallas areas. Fortunately i have some cash that i wud like to lend to someone.  I wud like to know what afe the possibilities and typically what paperwork should i look for before deciding to lend my money.

Ann Bellamy · Answer

Vib, there are several threads on this topic,  do a BP search on "how to be a private lender" and you will find several threads, which will then lead you to still more threads.

1.  First, and most important, find an attorney in your state who specializes in private/hard money lending.  This is not the real estate attorney who has closed a couple of hard money deals.  Find other hard money lenders and ask who they use.  Do not skimp on this step.  There are many federal and state laws regulating what you can and can't do, and banking commissions are looking for scapegoats.
2.  Your attorney can advise you on lending regulations and provide you with  loan docs.  I recommend you require the borrower to close with your attorney, certainly at least for the first few deals.

Vib Baker · Answer

Paul Crowson, Ann Bellamy, @Bill Gulley, @Jon Klaus -

Thanks you so much for your valuable comments. I will work on these and ofcourse update my profile.

Jon Klaus · Answer

Welcome to BiggerPockets, Vib. Why don't you tell us more about yourself at New Member Introductions?

http://www.biggerpockets.com/forums/55-new-member-introductions

Paul Crowson · Answer

Welcome to bp @vibbaker I'm not a high finance and paperwork savvy investor either, I started out about 20 months ago with a little money doing rehabs and looking to put the money to work with someone more experienced here in houston and Dallas. I found out that the transactional funding was simple and much more mutually beneficial to everyone. I had done a few notes with some experienced private money note guys, but it wasn't to my liking.

Bill Gulley · Answer

Vib, welcome to BP! Ann is absolutely correct in that first step, keep in mind that loaning your money is something that isn't too complicated from a regulatory stand point, but if you partner with others or use other people's money to lend, you'll be in for one of the most regulated business ventures you can get involved with!

An easy way to lend is doing transactional funding where money is only lent to accomplish a transaction. This market is limited but the risks are very low as lending goes (if done properly, practically none) and yields can be high.

One way to avoid lending issues is to be a partner in a project providing money inside the business entity, endless arrangements can be made as a partner. Good luck!  :)

What paperwork to look for what starting as a money lender

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