Question for Private Lenders

[Tammy White]

Question for individual private lenders — not institutions, hard money companies, or capital funds:

For those who have ever lent your own money on a real estate-backed deal, what made you comfortable enough to say yes?

Was it the borrower, the equity, the exit strategy, the property itself, being in first position, or something else?

Curious what everyday private lenders look at first before funding a deal.

[Kenneth Garrett]

@Tammy White

When lending private money there are a number of things I consider.

1. Whether the deal makes financial sense. If it's a flip or BRRRR is the ARV reasonable.
2. The quality of the individual.  Can they execute the plan and perform.  It is just as important to invest in the individual as the deal. 3. How are your funds protected?  With a note and mortgage or deed of trust (depends on your state).  Always close through a title company.     4. Always be in first position as the lien holder.  This insures if the project goes sideways you are protected.                                                       5. Building a relationship with the borrower is important.  I always ask about a difficult situation on a deal that the borrower had to resolve and how did they accomplish it.  Surprises happen; unexpected cost on the rehab, permits, difficulty in selling the flip, difficulty in refinancing the BRRRR, etc.