Private Money Lending Gone Bad

[John Williams]

Has anyone been on the lender side of private money and had a bad experience that they are willing to share? Whether you've lent money for an individual project, or you've invested in some sort of fund / group, I'd like to hear about your experience!

[Erik Estrada]

Too many. 

I have had to tell borrowers "are you sure you want to move forward with this? You are way too over leveraged." Many times and they still insist. Just because you get a loan approval does not always mean you should move forward with it. In a market like this where properties are sitting a bit longer, buyer demand is kind of stagnant, many appraisals have been coming in lower than anticipated. This in turn will kill your exit strategy if you are not doing your due diligence and playing conservative. Some Investors also underestimate the timeframes of the rehab, especially here in CA. It is very time consuming to get permit approvals and you may be in a position where you need to extend, pay fees, etc.. when your loan is past due.