Updated almost 9 years ago on . Most recent reply
Newbie in Arkansas Curious about how Private Lending Works
Ive been reading a few posts about Private Lenders but Im stil curious on how it works. Do i put down a downpayment? Do i pay a monthly payment? Do i have a specific time period to refinance the property? Do i also pay from the refinance? Is their a different rate for wholesaling, multifamily, or single families? Does the Lender pick the property? Any information would be great!
Most Popular Reply
Well, when I talk private lenders, I'm usually talking about people you've met - or even your own friends and family - who would like better, safer, less volatile returns on the retirement money, for example. Once you have established a personal relationship, it's safe to broach the topic of investing in your deal(s), as I understand. Check with your attorney/accountant about SEC requirements.
An example I can give is one of the people in my local investing group. He has a private lender who charges him 0% for six months (then, 18%) plus 10 points. He gets the money, does the deal (usually a flip), pays his lender back principal plus points (and interest, if any), then does it again. If he can do that twice in one year his lender gets 20% ROI.
Hope this helps ...