Private Money Paperwork

9 Replies

Hello BP Community, 

For Private Money lending is there any specific paperwork involved? If so does it need to be taken to an attorney? The reason I ask is because if the other person does not pay the PM Lender the money back I assume there would be consequences? 

For PM what is the usual % rate that is lend out?

Thank you all in advance.

@Al C.

Average private money fees are 5% loan origination fee and 1% monthly interest only for 12 month or less. 

The closing attorney will draw up a promissory note for the private lender to sign along with the person borrowing the money so there is nothing you personally do. 

Good luck

@Curt Davis  Thank you very much for clarifying. 

Is this info still current as of 1 year ago?   Also, besides a promissory note, I've read about a deed of trust or mortgage for private money lenders.   Is this document still needed?  Where can it be found? 


You need to hire an attorney when you originate a loan. They can have their fees paid at closing by the borrower. They can prepare any necessary paperwork. I am in Florida. I get a note, mortgage, and business purposes statement agreement signed. 

@John Thedford - thanks for the reply.  For clarification, if I make a deal with a PML, and s/he decides to lend me 100k, would I have to hire an attourney to draw up the loan before the money gets wired to closing/title company?  Tks much

@Manuel Savorelli

No. The PML would have his attorney draft the paperwork. If you use title companies, make sure it is closed through them for your protection on the purchase.

@Manuel Savorelli

p.s.---PML or HML is usually only viable for flipping. Generally speaking, the rates are too high for a buy and hold and will eat up all of your profits.

Thanks @John Thedford for clarifying... 

Ideally, I'd love to not have to use PML or HML and stick to cheaper, conventional loans but since it's hard to qualify due to documentation requirements, I'm planning on foregoing a portion of the immediate cash flow to secure funding, then refinance ASAP, and cash flow after the fact.

What if the lender or lenders are family or friends but you want to have a promissory note to make them comfortable and the lending legit?  Can you draft your own note or does it need to be drafted by an attorney or can you have the note you draft notarized? 

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