Real Estate Development & New Home Construction

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Venu Vedre
  • Rental Property Investor
  • Davidson, NC
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15
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Lending money to a General contractor

Venu Vedre
  • Rental Property Investor
  • Davidson, NC
Posted Jan 25 2022, 15:08

Any thougths are appreciated. Here is the background:

Background:

I met a General contractor a few years ago through a local RE meetup in Charlotte NC area. I have seen his work onsite and He is very good at what he does and has completed lot of townhome projects recently.

He currently has a investment opportunity that i am interested in . He is building a townhome product and is looking for investors to close the property and for pre-construction development and for securing construction loan. This loan is structured as debt(and not equity) with a decent annual rate of return.

Question:

I have never loaned money directly to a GC before. What is the best way to make sure my Loan is secure.

Looked up a few posts online and sounds like a couple options are 1) joint-tenancy on title, or 2) a deed of trust. I dont quite understand the pros and cons of each , or is there a better way to structure this.

Planning to reach out to a few local RE attorneys but wanted to get thoughts here as well.

Thanks,

Venu

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