Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
I know there isn’t a limit on how many private mortgages I can have...what I’m asking is this...
Is there a limit to how many private UNSECURED notes that I can have to use for my flipping business.
Or asked this way...will I have any legal issues if I went and borrowed UNSECURED funds from 4-6 people and tossed that money in my operating account to use as down payment and rehab funds for a BRRRR deal for example? I would make interest only payments to them during this period and then repay them with a refi.
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
7y
I don't think there's a limit for what you want to do. To be safe, treat each of the 4-6 people separately i.e. you borrow separately from each person as opposed to pooling their funds first and then borrowing them. Whenever you pool investors money together, you need to consider securities issues.
Maybe you're thinking about the limits that Fannie and Freddie put on borrowers that want to get investment loans on residential property? This is a different thing and is an arbitrary requirement that the GSEs put on the loans that they buy.