Private Money Lending: Scaling Partnerships

Mike GrudzienPro Member

Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes

1y

I don't have comments at the moment, but I commend your efforts and wish you success!

1 Reply

Jennie Berger

OP

Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes

1y

Thanks @Mike Grudzien, appreciate the kind words!

0 Reply

Jeff Wills

Lender · Tampa, FL · Member since 2018 · 18 posts · 4 votes

1y

I would say that you certainly need an attorney who specializes in lending law in your state to draft you lending docs. You should always be first position, and only lend on the borrowers LLC to avoid homestead/owner occupied foreclosure proceedings which are always less favorable to you.

Personally I do not go over 70% LTV AS IS, but terms are at your discression and comfort level.

Right now, I charge 12% interest to borrowers, and return 9% to my investors Annually. I then charge a 6% origination fee to the borrower, but no other fees apply.

I think you just set up on LLC/Company, and then all loans should be "originated" from there. If you plan to coinvest, or invest personal funds as well, use a seperate LLC so that you become a client of your parent company, further insulating your liability.

If you have any questions please do not hesistate to reach out, sounds like you have a great foundation already.

1 Reply

Jennie Berger
OP
Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes
1y
Quote from @Jeff Wills:

I would say that you certainly need an attorney who specializes in lending law in your state to draft you lending docs. You should always be first position, and only lend on the borrowers LLC to avoid homestead/owner occupied foreclosure proceedings which are always less favorable to you.
Personally I do not go over 70% LTV AS IS, but terms are at your discression and comfort level.
Right now, I charge 12% interest to borrowers, and return 9% to my investors Annually. I then charge a 6% origination fee to the borrower, but no other fees apply.
I think you just set up on LLC/Company, and then all loans should be "originated" from there. If you plan to coinvest, or invest personal funds as well, use a seperate LLC so that you become a client of your parent company, further insulating your liability.
If you have any questions please do not hesistate to reach out, sounds like you have a great foundation already.
Thank you for your recommendations!

To clarify - are you saying that opening up a new 'joint' LLC under my main LLC (so in essence I would create a series LLC and then open up smaller LLCs underneath it?) with each new capital partner is the best way to scale my lending operations?

I feel I've got the rest down pretty well and am following your SOPs in my practice already. I have 2 LLCs - 1 that I am sole owner of, and another that I have a partner on. I lend in both of these LLCs currently.
0 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

1y

Quote from @Jennie Berger:

Hello BP!

I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.

Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).

My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.

Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.

To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.

Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.

> Is one of these the best option?

> What other options are there that are streamlined and will protect everyone involved?

> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?

Thanks so much in advance for your wisdom and advice!

Nice to meet you Jennie.

There's two major aspects to consider. The first is entity formation. I recommend use of a SERIES LLC. Each series is treated for legal and liability purposes as separate from all other series, but only one LLC filing/formation is necessary, and only one tax return filed. We currently have 88 different SERIES in our "parent" LLC. So, the note holder/lender is listed as "Name, LLC Series 1", "Name, LLC Series 2", etc. Ownership of each series will be by percentage ownership of the LLC. Each LLC will hold a single note. You will be manager of the LLC.

The other workable option would be to have the note holders listed on the note individually. So if it were you with a 50% ownership, and someone else with a 50% ownership, both of you - or your respective entities, would be direct owner of the note. A problem may arise if there’s a disagreement as to an action to take. Unline the LLC structure where you are manager, and hence make all decisions, any owner of the subject note has a say in any decision. Let’s say there were 5 people (or their entities) listed on the note. Let’s say you had a side agreement that stated a majority of ownership rules, and let’s say a 5% owner objected to a sale of the note everyone else agreed to. By refusing to execute the note sale agreement, the 5% owner would effectively “kill” the deal. This is one reason I consider the series LLC a superior mechanism.

The second major aspect to consider is compliance with securities laws.

There’s lots of confusion, incorrect information, and false assumptions being made aboutthe legality of raising capital for investment. So here is a very short, quick outline of the legal process in the U.S.A.

Any capital raised for investment purposes, in which one or more parties is NOT active inthe management of the investment entity, is a securities offering. All securities offering must be REGISTERED with the Securities and Exchange Commission, unless the offering is covered under an exemption from registration.

There are three primary exemptions from SEC registration. The exemption for intra state offerings (the offer is made to investors residing in a single state), the exemption for investors with FEDERAL accreditation (Federal banks, investment banks of a certain size, Federal funds dealers, etc) and the private placement exemption.

Since single state offerings are very limiting, and many states require state registration and compliance with inherent costs, the private placement exemption remains the most popular.
There are two methods of “private placement”. The old traditional one was the general exemption for private placement. The sponsor, with the help of a securities attorney, determines that the offering meets the (often ambiguous) requirements for determination of private placement and proceeds with the offering. The advantageous of this type of offering is simplicity, cost, and speed.

The second method of private placement, is compliance with the SEC “safe harbor Reg D. Sec 504, 505, or 506 b or c. This will necessitate the production of a Private Placement Memorandum (PPM), Operating Agreement, and Subscription Agreement. Current cost are $8,000 to $15,000 for legal fees, inclusive of Form D filing with SEC and notification filing for the states the initial investors reside in. The advantages of the Reg D are (1) if the sponsor complies with the Reg D requirements, the offering as to it being a private placement will NEVER be challenged by the SEC. Further, if disgruntled investors sue, the sponsor has a “definitive defense” as well as a “statutory defense” in a lawsuit. This means that by merely complying with the Reg D requirements, the sponsor should have enough of a defense to beat any lawsuit. I can tell you from personal experience that a small few investors will consider suing EVEN IF THEY MADE MONEY; and that no attorney will take their case (at least not on contingency) if the sponsor complied with Reg D, absence fraud. As important, all sophisticated investors will only consider investment in private offerings that are Reg D, or occasionally Reg A, compliant.

The most important aspect of Reg D is the 506 c offering, which ALLOWS general solicitation and advertising, and eliminates the requirement of the sponsor and investor having a prior relationship.

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Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1y

Quote from @Jennie Berger:

Hello BP!

I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.

Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).

My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.

Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.

To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.

Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.

> Is one of these the best option?

> What other options are there that are streamlined and will protect everyone involved?

> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?

Thanks so much in advance for your wisdom and advice!

Here is what I would do:

Take the existing LLC and do a participation agreement with them on that specific deal. So your entity would still be the lender, but you have a participation agreement on the loan.

This will not be syndicating and should keep you out of hot water with SEC etc (note not an attorney but do participation agreements all the time).

Note that the partners agreement is not recorded but they receive a partial assignment and allonge from you.

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2 Reply

Jennie Berger
OP
Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes
1y
Quote from @Chris Seveney:

Quote from @Jennie Berger:

Hello BP!
I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.
Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).
My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.
Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.
To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.
Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.
> Is one of these the best option?
> What other options are there that are streamlined and will protect everyone involved?
> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?
Thanks so much in advance for your wisdom and advice!

Here is what I would do:
Take the existing LLC and do a participation agreement with them on that specific deal. So your entity would still be the lender, but you have a participation agreement on the loan.
This will not be syndicating and should keep you out of hot water with SEC etc (note not an attorney but do participation agreements all the time).
Note that the partners agreement is not recorded but they receive a partial assignment and allonge from you.

Hey Chris:
This seems to be the easiest way to do things. Assuming my capital partners trust me with their money, I don't see another more efficient way. Should I have an attorney in MY home state draw up this participation agreement? Or, would it be better to have an attorney in the state where we're lending funds to draw it up? (In this case, I'm considering a new loan in TX)
Thank you for your input!
0 Reply
Jennie Berger
OP
Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes
1y
Quote from @Chris Seveney:

Quote from @Jennie Berger:

Hello BP!
I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.
Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).
My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.
Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.
To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.
Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.
> Is one of these the best option?
> What other options are there that are streamlined and will protect everyone involved?
> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?
Thanks so much in advance for your wisdom and advice!

Here is what I would do:
Take the existing LLC and do a participation agreement with them on that specific deal. So your entity would still be the lender, but you have a participation agreement on the loan.
This will not be syndicating and should keep you out of hot water with SEC etc (note not an attorney but do participation agreements all the time).
Note that the partners agreement is not recorded but they receive a partial assignment and allonge from you.
My attorney also mentioned this assignment and allonge - I'm going to get that template for use on future transactions. Makes a lot of sense! Also, my attorney recommended a Co-Lending Agreement as opposed to a participation agreement. Have you use co-lending agreements before?
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Jennie Berger:

Quote from @Chris Seveney:

Quote from @Jennie Berger:

Hello BP!
I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.
Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).
My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.
Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.
To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.
Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.
> Is one of these the best option?
> What other options are there that are streamlined and will protect everyone involved?
> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?
Thanks so much in advance for your wisdom and advice!

Here is what I would do:
Take the existing LLC and do a participation agreement with them on that specific deal. So your entity would still be the lender, but you have a participation agreement on the loan.
This will not be syndicating and should keep you out of hot water with SEC etc (note not an attorney but do participation agreements all the time).
Note that the partners agreement is not recorded but they receive a partial assignment and allonge from you.
My attorney also mentioned this assignment and allonge - I'm going to get that template for use on future transactions. Makes a lot of sense! Also, my attorney recommended a Co-Lending Agreement as opposed to a participation agreement. Have you use co-lending agreements before?

have not done co-lending agreement in the past, so not sure the difference - in participation there is one person who is the "manager" of the loan - I would ask that question in co-lending agreement. for example in my agreement if it defaults we manage it and call the shots - in co-lending who makes that decision?
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Jennie Berger
OP
Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes
1y
Quote from @Chris Seveney:

Quote from @Jennie Berger:

Quote from @Chris Seveney:

Quote from @Jennie Berger:

Hello BP!
I have a growing community of friends / colleagues / et al who are interested in putting their money to work passively by private lending. I've been in the private lending space for about 1 year, and have lent on 3 projects to date. I have connected with many borrowers who are asking me to lend on their deals, and while many of these deals sound very attractive, I'm limited in my own source of funds, hence the reason for this post.
Background: I've been a designer and developer for the last 5.5 years, specializing in large gut renovations and ground up construction of single family homes and small multi unit buildings in the city of Chicago. I own and operate a few rentals, both mid term furnished and long term unfurnished, in 3 different states. I am an Illinois licensed real estate agent (mainly used for my own developments).
My Role in these private lending partnerships: Source and vet the borrowers, underwrite deals, originate, manage and service the loan, be a fiduciary.
Context: Currently I lend in both my own LLC (just me, sole owner), and in a separate LLC (JV between one of my capital partners and me). This works well, but seeing as new people want to come on board, I don't believe creating a new LLC for each new capital partner makes sense, nor is it scalable.
To clarify: I am NOT looking to pool funds or syndicate at this time. Merely to lend more borrowers money on more of their rehab / flip deals, as well as offer transactional funding for same day double closes. In essence - each new capital partner would lend only on one deal with me. I will NOT be mingling funds from multiple partners on the same deal.
Locations: Over the last year, I have lent only in Chicago IL, where I'm presently based. I'd like to start lending in other states - Texas, Florida, and maybe some others as well as Chicago.

Goal: Before presenting these lending opportunities to new capital partners, I'm hoping to glean more insight into the wisest, most efficient way to structure these partnerships to protect everyone involved. I've read/learned a little bit about: Partnership lending, table / wholesale funding, fractional notes, lending trusts, note on note.
> Is one of these the best option?
> What other options are there that are streamlined and will protect everyone involved?
> Which type of attorney I'd need to hire to draw up a legal document(s) for this type of partnership?
Thanks so much in advance for your wisdom and advice!

Here is what I would do:
Take the existing LLC and do a participation agreement with them on that specific deal. So your entity would still be the lender, but you have a participation agreement on the loan.
This will not be syndicating and should keep you out of hot water with SEC etc (note not an attorney but do participation agreements all the time).
Note that the partners agreement is not recorded but they receive a partial assignment and allonge from you.
My attorney also mentioned this assignment and allonge - I'm going to get that template for use on future transactions. Makes a lot of sense! Also, my attorney recommended a Co-Lending Agreement as opposed to a participation agreement. Have you use co-lending agreements before?

have not done co-lending agreement in the past, so not sure the difference - in participation there is one person who is the "manager" of the loan - I would ask that question in co-lending agreement. for example in my agreement if it defaults we manage it and call the shots - in co-lending who makes that decision?
It sounds similar! My LLC is the 'lead lender', and my capital partner is the 'co-lender'. My company makes all the decisions.
0 Reply

Jennie Berger

OP

Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes

1y

@Don Konipol Thank you for your thoughts!

To clarify, in this scenario...

There's two major aspects to consider. The first is entity formation. I recommend use of a SERIES LLC. Each series is treated for legal and liability purposes as separate from all other series, but only one LLC filing/formation is necessary, and only one tax return filed. We currently have 88 different SERIES in our "parent" LLC. So, the note holder/lender is listed as "Name, LLC Series 1", "Name, LLC Series 2", etc. Ownership of each series will be by percentage ownership of the LLC. Each LLC will hold a single note. You will be manager of the LLC.

...if I am the lender along with 1 other capital partner on one particular deal, would we both own that particular LLC series (50/50, let's say, assuming we both contribute to the project in equal amounts)?

0 Reply

Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Quote from @Jennie Berger:

@Don Konipol Thank you for your thoughts!
To clarify, in this scenario...

There's two major aspects to consider. The first is entity formation. I recommend use of a SERIES LLC. Each series is treated for legal and liability purposes as separate from all other series, but only one LLC filing/formation is necessary, and only one tax return filed. We currently have 88 different SERIES in our "parent" LLC. So, the note holder/lender is listed as "Name, LLC Series 1", "Name, LLC Series 2", etc. Ownership of each series will be by percentage ownership of the LLC. Each LLC will hold a single note. You will be manager of the LLC.

...if I am the lender along with 1 other capital partner on one particular deal, would we both own that particular LLC series (50/50, let's say, assuming we both contribute to the project in equal amounts)?
Ownership of the LLC can be structured in any way agreement to the members. For instance, let’s say you both contribute 50% of the capital, but as compensation for your time and effort (the other investor is relatively passive), you are to receive 60% ownership. Then you would be a 60% ownership member, while the passive investor would be a 40% ownership member, although you both contributed 50% of the capital. Another way to do it is each get 50% ownership, but the LLC OPERATING AGREEMENT states that you receive 60% of the income (return of capital is 50/50). The LLC structure can be used for almost any split through the Operating Agreement, which is similar to the by laws of a corporation.
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Jeff Wills

Lender · Tampa, FL · Member since 2018 · 18 posts · 4 votes

1y

Yes, I would defer to a tax attorney for best practices in your state, but yes I have my holding company, then a new LLC for each deal/investor. This way, you insulate yourself from any singular bad deal taking down your entire empire you are building.

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Jennie Berger

OP

Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes

1y

***UPDATE*** Thought this info would be valuable to those also looking to grow their private lending business withOUT growing too large into a full fledged 'organization', 'syndication', or 'fund.'

I spoke with an attorney yesterday who specializes in private money lending (among other areas) and we decided the best method for what I'm trying to accomplish currently is a 'CO-LENDING AGREEMENT.' Essentially, it specifies all of the terms and expectations from and for the lending partner I'm bringing in on each particular deal.

Granted, this type of agreement requires a high level of trust from the lending partner, as they will be investing their money into deals I have vetted, and sending money to my LLC's bank account. While I don't think this type of arrangement would work across the board - particularly for people I know but haven't established a very close relationship with - it's a great starting point for working with those who know me and have a high level of confidence in my strategy, underwriting, connections, and above all, character.

A second option I've investigated further that I'm also going to pursue (which was discussed here briefly) is working with capital partners who have money they're looking to put to work but no time or interest in vetting the borrowers or the deals. Essentially, 'brokering' (if you will) the deal between the borrower and the lender. I'm responsible to source, vet, underwrite, originate, and service the loan from start to finish, while my borrower gets funded, my capital partner makes a solid interest rate, and I earn the origination fees along with a small servicing fee, if applicable. ***This type of 'brokering' may not be allowed in every state, but in the states where it is, I belive it's a very viable option to grow my lending business without having to allocate all of my own capital to these deals. Check with an attorney in the state you wish to lend in to ensure this is legal.

As someone who has been on both sides of these types of transactions - that is, the designer / developer / builder / borrower / Realtor and now the lender - that's where I believe I can provide the most value.

I am always open to collaborations and partherships AND learning more, so please feel free to chime in with suggestions, questions, and anything you find pertinent to share!

2 Reply

Tom Palmieri

Contractor · Miami/ Asheville · Member since 2021 · 26 posts · 13 votes

1y

Do you do rural location loans in Gerton NC?

0 Reply

Jesus Alex ArcePro Member

Investor · San Francisco, CA · Member since 2023 · 3 posts · 1 vote

1y

Thanks for your post. Lots of useful information is provided here. Do you have any interest in lending in California? I am looking for GAP funding for a fix and flip in Capitola CA, PML is preferred. We are experienced fix and flip operators. Completing multiple projects per year. If interested let's connect and review the details.

0 Reply

Jennie Berger
OP
Lender · Chicago IL · Member since 2020 · 358 posts · 230 votes
1y
Quote from @Jesus Alex Arce:

Thanks for your post. Lots of useful information is provided here. Do you have any interest in lending in California? I am looking for GAP funding for a fix and flip in Capitola CA, PML is preferred. We are experienced fix and flip operators. Completing multiple projects per year. If interested let's connect and review the details.
At this time, I don't think CA will work for me. Thank you though!
0 Reply

James McGovern

Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 409 votes

1y

If you are interested in lending in Connecticut I can help you

0 Reply

Private Money Lending: Scaling Partnerships

Private Money Lending: Scaling Partnerships

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