I know that many members have used private money and I want to fund a deal that I have in the works. I only need like 30% of the value of my project. From anyone's experience will a private lender risk lending such a small percentage.
I do think there are private lenders out there that will do a deal similar to what you are asking. Many lenders including me ask to be 1st position however. An LTV, on paper, of what you are saying is great and would loosen up the terms. Perhaps you could free up your capital and use a larger loan that includes rehab, and could then increase the amount of deals you are doing. Just a thought. Good luck with the deal and keep us posted !
Private money usually means borrowing from friends, family or a known individual.
It's not a bank or a hard money lender.
You can borrow as much as little they are willing to lend you, under whatever terms you agree on.
I have done every single one of my deals with "private money." Like Joe stated, my definition of private money is a private individual with money to invest, not a Private Hard Money Lender, which is very different.
I started out doing mid dollar flips that needed private money investments in the $280k-$400k just to do one deal. I then switched markets and was doing the same type of flips only needing $80k-$160k. I now offer all my investors a very conservative first lien position lien in the $30-$50k. This has allowed me to open the door to many more potential private investors.
As an example, if the investment is $30k and the property will sell for more than $60k, that is very solid collateralization of that loan and that first lien position and promissory note will give that investor a good degree of confidence in the deal so long as you presented yourself well and they trust that you will be able to perform.
Similarly, if your deal has 50-70% equity on top of what they are investing, you should have a solid offer to present so long as you present it properly.
I hope that helps.
Private money or HML...whatever you want to call it is all over the place. A true deal will sell the deal. I don't know how much are you seeking but many HML don't want to do small transactions in the 20K or 30K range. I do HML and I don't generally lend less than 50K. There isn't enough profit in the small deals to make it worthwhile. Even most banks won't lend less than 50K for that reason.
John Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com
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