Due Diligence on Private Lenders
I have had a couple of discussions with a private lender and have a couple of questions to put to the group.
The basics:
The lender provides funds to cover the down payment and reserves for minor repairs on 2-4 unit properties. The borrower, me, must be eligible for an FHA loan and can manage the project/investment as I see fit. The lender only stepping in if there is a concern about unethical activity. He likened it to me being the CEO of the project and he (and his partners) represent the board, and I can be overruled if they see fit.
As a next step he has asked for three years of tax returns, and my credit score. He has advised that I can redact my returns as I see fit.
I am not in the habit of giving out my tax return info, so what should I omit in order to ensure that my information is not used inappropriately. He is looking for proof of income to determine the amount of lending I would be eligible for.
What steps should I take in terms of due diligence to ensure that the offer is legitimate?