My husband and I currently have an owner occ duplex and have been saving for another investment property for a while. Unfortunately the area we live in is fairly expensive and another property in decent condition would cost $325k+ and any good properties are usually under contract in less than a week. We did look at one last week but then found out due to my husbands self employment we most likely couldn't get a conventional loan (even though we could swing a down payment). We watched the Private Lending webinar last night with the thought that we might be able to ask our wealthy relative (who does larger scale RE investing) if he would want to fund our loan. But it got us thinking of maybe it makes sense to hold off buying for a year and maybe do some private lending in the mean time. We have some cash built up that is only making 1% and it kills me to have it sitting there for a long time frame.
Any thoughts on switching gears? I don't like the idea of peer-to-peer lending as much as there is no collateral but lending to someone unknown to me us also scary. I would love some feedback from other lenders out there. Thanks!
Welcome to BP! You should find experienced investors with a good track record. Even very successful investors still borrow money from private lenders; it usually beats the cost of hard money loans. Everyone wants to borrow money,, but few have a track record. I wouldn't loan money to anyone with less than 10 years of proven experience in their city, but that's me. Others here might disagree?
A lot of real estate investors borrow private money and so this can be a good way to make a solid return. We've borrowed from dozens of such people. Although, of course, the upside is lower than with real estate investment. But of course, so is the risk, as long as you find a quality investor and vet them thoroughly.
hi tawny i think the banker sounds a lot easier and safer make sure to use the calculater
If you wish to invest your money, I've found investing through a Hard Money company will give you the best return - up to 12% on money you lend out. Better protection as well.
I started with landlording and have completely moved into private lending. It was scary at first, but I am so glad I did it. You need to find a really good real estate attorney in your area that can guide you and write up the loan documents.
As far as lending to someone you don't know, you should be covered from most risk by the property as long as:
1. You have primary lien
2. You have mortgagee title insurance
3. You do not lend more than 70-75% LTV
In my business, I do not care about the borrower. I only care about the value in the property I am lending against.
Thank you so far for all of your responses. This has been helpful.
I am thinking of doing the same thing.
Anyone here in the Atlanta area that I could buy their lunch and get an attorney referral for documents?
Better than putting together a new lending program would be to join the lenders in holding a mortgage note / trust deed. Please contact me directly and I'll get you some super helpful information about being the lender without making a bunch of initial mistakes that new lenders make. Thanks!
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