Private Lending

3 Replies

Hello All,

I would like to know about private lending. How does it work, terms, anything...



Private lenders are people you know personally that are willing to lend you money.  Rates and terms are whatever you can negotiate.  Probably high single digits if they know what their money is worth.  Maybe less if they're comparing it to bank CDs.

Typically use a promissory note to outline the details of the loan and a deed of trust or mortgage (depending on the state) to give them a security interest in the property.  The deed of trust or mortgage gets recorded.

@Mario J Perez  What are you trying to finance?  Is it for a flip or rental?  If your are flipping and needing financing for 2-5 months then I would expect a 8-12% interest only rate.  Preferably no fees.  

Depending on your relationship with the lender/friend the end goal is for them to finance the the acquisition.  If you can get them to take on the cost of acquisition then you create more flexibility to take on more projects.  It's a double sided sword though.  If your lender has most of the cash in the deal then they are probably going to want a equity partnership... vs a debt partnership.


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