Private money loan. Beginner. What do I start with? Criteria

2 Replies

What do I start with to create a criteria for lending? A developer asked me "what are your terms?" and I had trouble to come up with something other than the interest rate. Thank you

@Boris Plotnikov I just want to be clear that you are asking what rates and terms you should be implementing as a lender, is that correct?

If so, I would suggest you not lend at all until you have a much better grasp of lending in general.  Rates and terms are for the most part the simplest part to the equation.  If that is stumping you then its probably best to hold off until you have your entire plan in order.  

If I were you, the first thing I would do is meet with an attorney and get official loan docs drafted.  That process will force you think and begin putting a business plan to paper.     

The short answer to your question though, I would call around to every hard money lender you can find in your area, undercut their rates by about 2-3% and that should be a good starting point for your private money (of course this depends on your capital source). Ask what they require and go from there. Necessary docs, fees, how many month terms, pre payment penalties, extension fees, personal guarantees, LTV/LTC ratios, credit score criteria, cash needed, draw process, the list goes on.

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