Starting out as a Private Lender....?

Question

I am wanting to start Private Lending and wanted to get feedback and tips on how to get started?

I am looking for 8-12% ROI ...seems to be high expectations from what I keep hearing...

Also looking and able to extend $30-$75k in private lending to an real estate investor or flipper.

How would I get started?  What are some things I should need or know?

Jeff S. · Answer

If APO, AE means you are in the armed forces in Europe, Bryan C., then first and most importantly, thank you for your service.  Much less important, is to wait until you return and/or have some local boots on the ground with signature authority, in the area you want to lend.

$30k to $75k is not that much unless you're looking at relatively low value first position deals, but I don't know your area or to whom you might lend. I strongly suggest you stay away from loaning in second position (such as for rehab money).  You loans should all be for a business purpose, which, in your case, would likely be for short term flips only.

Depending upon the prevailing rates and how well you can stay loaned out, you should be able to well exceed your 8 to 12% goal.

I our view, loaning locally, to those you've met and formed a relationship with, on local flips that you've physically seen, is the safest way to go.  Depending upon your state, you might need a broker to originate your loans for you and you should probably use one anyway as a second set of eyes, no matter what.  Of course, you'll need a good lending lawyer.

I summarized our process in the thread below, including how to find these individuals, how we vet your borrowers and their properties, and a little on the overall process.  It has served us well and should give you a good start.  I would like to become a hard money lender. Any resources?  Do a search and you'll see many similar threads.

Good luck, Bryan.

Steve Babiak · Answer

Try starting out by reading these links:

http://www.biggerpockets.com/forums/49/topics/9000...

http://www.biggerpockets.com/forums/49/topics/7978...

http://www.biggerpockets.com/forums/49/topics/1432...

And don't forget to follow the links on those pages, and also check out any links that appear near the bottom under Related Discussions.

Dawn Anastasi · Answer

I don't think 8-12% is unreasonable.  You can develop relationships with people on the site, and contact them personally about deals they have been doing and if they are looking for funds to do more deals (with you getting a return).  You can also post an ad in the Marketplace that you have money to lend, but that method will get you about a million emails.

Bryan C. · Answer

Thank you for the comment.  I am focusing on the SW Ohio area.  I prefer working with people that I know.

Delon Hall · Answer

Have you picked a market that you were interested in lending to?

Bryan C. · Answer

Thanks everyone!  I will do some more research.  I think $75k is more than enough if lending to 1 person.  I will take a better look this weekend and post

Starting out as a Private Lender....?

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