I'm on the borrower side of private notes — here to learn the lender's perspective

I'm on the borrower side of private notes — here to learn the lender's perspective

Member since 2024 · 3 posts · 2 votes

Hi all — Florida-based investor, buying out of state. I've been investing since 2015; the first stretch was wholesaling and wholetailing in my local market, and since early 2024 I've focused on buying affordable single-family homes and reselling them with owner financing. I hold and service those notes on the buyer side — they pay me monthly, and since it's a contract-for-deed structure, I retain title until it's paid off rather than recording a lien in their favor. When I bring in a private lender on a property, that works the other way: the lender gets a recorded first lien against the property, and I pay them back by autopay. My experience is that most borrower/lender friction in this space comes down to sloppy paperwork and poor communication.

Joined a while back, finally participating. I'm mostly here to understand what people considering their first private loan worry about, and I'm glad to answer questions about how these notes get structured and serviced from the borrower's side. Not selling anything.

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Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
2mo
Quote from @Justin Schulman:

Hi all — Florida-based investor, buying out of state. I've been investing since 2015; the first stretch was wholesaling and wholetailing in my local market, and since early 2024 I've focused on buying affordable single-family homes and reselling them with owner financing. I hold and service those notes on the buyer side — they pay me monthly, and since it's a contract-for-deed structure, I retain title until it's paid off rather than recording a lien in their favor. When I bring in a private lender on a property, that works the other way: the lender gets a recorded first lien against the property, and I pay them back by autopay. My experience is that most borrower/lender friction in this space comes down to sloppy paperwork and poor communication.

Joined a while back, finally participating. I'm mostly here to understand what people considering their first private loan worry about, and I'm glad to answer questions about how these notes get structured and serviced from the borrower's side. Not selling anything.

Great question and welcome! I think you're in a good spot to add value here because a lot of investors are curious about private lending but don't get to hear much from someone who actually structures and services notes. One thing I'd be interested in is how you handle situations when a borrower falls behind. At what point do you typically step in, and what practices have helped keep defaults and misunderstandings to a minimum? It sounds like you've found that clear expectations and consistent communication matter just as much as the paperwork itself. Looking forward to hearing more about your experience. Happy to connect and answer any questions you have!

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  • Brett SynickyPro Member
    Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 875 posts · 498 votes
    2mo

    Welcome to the BP community! It is a great place to meet new friends and learn about various aspects of real estate and more.

    Check out BP Podcasts: https://www.biggerpockets.com/podcast

    • Member since 2024 · 3 posts · 2 votes
      2mo

      Thanks, Brett! Appreciate the welcome. 

      Thanks, Logan! I'll check that out.

  • Logan HelmerickPro Member
    New to Real Estate · Denver, CO · Member since 2024 · 18 posts · 19 votes
    2mo

    @Justin Schulman Hey Justin, welcome to the community! There's a great investor/lender within BP named James Dainard (who actually is presenting at BPCON in October, which I'm really excited to see) who has an awesome video on this. Check out the 20:30 portion of this video that BP posted last year and I think James gives a lot of great advice on generally what investors should worry about before going through with a private lender. Always helps to have some possible red flags on your radar in my experience.

  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2mo
    Quote from @Justin Schulman:

    Hi all — Florida-based investor, buying out of state. I've been investing since 2015; the first stretch was wholesaling and wholetailing in my local market, and since early 2024 I've focused on buying affordable single-family homes and reselling them with owner financing. I hold and service those notes on the buyer side — they pay me monthly, and since it's a contract-for-deed structure, I retain title until it's paid off rather than recording a lien in their favor. When I bring in a private lender on a property, that works the other way: the lender gets a recorded first lien against the property, and I pay them back by autopay. My experience is that most borrower/lender friction in this space comes down to sloppy paperwork and poor communication.

    Joined a while back, finally participating. I'm mostly here to understand what people considering their first private loan worry about, and I'm glad to answer questions about how these notes get structured and serviced from the borrower's side. Not selling anything.

    Great question and welcome! I think you're in a good spot to add value here because a lot of investors are curious about private lending but don't get to hear much from someone who actually structures and services notes. One thing I'd be interested in is how you handle situations when a borrower falls behind. At what point do you typically step in, and what practices have helped keep defaults and misunderstandings to a minimum? It sounds like you've found that clear expectations and consistent communication matter just as much as the paperwork itself. Looking forward to hearing more about your experience. Happy to connect and answer any questions you have!

    • Member since 2024 · 3 posts · 2 votes
      2mo
      Quote from @Jimmy Lieu:
      Quote from @Justin Schulman:

      Hi all — Florida-based investor, buying out of state. I've been investing since 2015; the first stretch was wholesaling and wholetailing in my local market, and since early 2024 I've focused on buying affordable single-family homes and reselling them with owner financing. I hold and service those notes on the buyer side — they pay me monthly, and since it's a contract-for-deed structure, I retain title until it's paid off rather than recording a lien in their favor. When I bring in a private lender on a property, that works the other way: the lender gets a recorded first lien against the property, and I pay them back by autopay. My experience is that most borrower/lender friction in this space comes down to sloppy paperwork and poor communication.

      Joined a while back, finally participating. I'm mostly here to understand what people considering their first private loan worry about, and I'm glad to answer questions about how these notes get structured and serviced from the borrower's side. Not selling anything.

      Great question and welcome! I think you're in a good spot to add value here because a lot of investors are curious about private lending but don't get to hear much from someone who actually structures and services notes. One thing I'd be interested in is how you handle situations when a borrower falls behind. At what point do you typically step in, and what practices have helped keep defaults and misunderstandings to a minimum? It sounds like you've found that clear expectations and consistent communication matter just as much as the paperwork itself. Looking forward to hearing more about your experience. Happy to connect and answer any questions you have!


       Hey Jimmy thanks for the welcome! 

      Good question. To be clear, all of my structured notes are in the form of selling on Contract for Deed, where I'm the one holding the note. That's where I've actually got default experience; on the private lending side I'm the one being serviced, not doing the servicing.

      Honestly, I've moved away from informal check-ins and let the notices do the talking instead. These are lower-dollar homes with a first-come-first-served buyer model, so no credit or income underwriting up front. Therefore, the back end needs to be just as consistent, not dependent on me staying personally on top of every account. A documented notice process treats every buyer the same way and gives me something enforceable if it needs to go further. And honestly I was doing personal communications to late payers in the past and compliance is much better when that piece was eliminated.

      From there it's genuinely state-specific as far as the actual notice process.

      Happy to go deeper on either state's process if it's useful.

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