Private Lending Process

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Private Lending Process

Dilshad Randhawa
Member since 2026 · 14 posts · 2 votes

Hello All,

So meantime I want to learn on the side Private Lending. I did go to an event several years ago It was of George Antone in California. So far I know non-owner occupied loans should be done if doing Private lending and also LTV (loan to value), first-lien, etc. But the biggest obstacle I am seeing at moment is the documentations required those are pretty expensive, especially for a beginner like me. Second thing is I am unemployed so I am working on finding job first in order to get funds. So I wanted like a step by step process for it, even possible free updated information on private lending step by step is it possible as i'm in tight spot at moment but would love to learn this on the side. What team members I would need to connect with? Private brokers? Title/Escrow companies? etc? Is there any Private Lender who can guide me especially for a simple loan process if I want to have my first client later on once I get funds that is? Thanks

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    15h

    Dilshad, for a first private-lending deal, I’d focus less on finding the “perfect” borrower and more on building the process and team before any money goes out.

    At a minimum, I’d want a real-estate attorney familiar with private lending in the state where the property is located, a title/escrow company, proper lender’s title insurance, hazard insurance naming the lender appropriately, and ideally a loan servicer if you don’t want to handle payment tracking yourself.

    On the underwriting side, I'd look beyond LTV. Borrower experience, exit strategy, rehab budget, after-repair value assumptions, lien position, liquidity, and what happens if the project takes longer than expected all matter.

    From the CPA side, I’d also think through how you want to hold the lending activity, how interest and points will be reported, and whether this is going to remain occasional investing or eventually become a more active lending business.

    For your first deal, having an attorney prepare or review the promissory note, deed of trust/mortgage, guarantees, default provisions, and closing package is worth it. Lending and usury/licensing rules can vary significantly by state, so I wouldn’t rely on one generic set of documents across markets.

    Feel free to DM me. I’d be happy to send over a few resources from the tax/investment side that may help as you build out the process.

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    • Dilshad Randhawa
      OP
      Member since 2026 · 14 posts · 2 votes
      6h

      Hi Ashish,

      Thanks, so for every State I would need to find separately attorney for Private Lending? I noticed that attorneys especially for documentation preparation are very expensive, any way to get a cheaper option of this? Thanks.

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  • Michael Eskenasy
    Investor · Pacific Northwest · Member since 2026 · 536 posts · 298 votes
    4h

    Dilshad, I’d be careful trying to solve the attorney cost problem before you solve the lending-process problem.

    You do not necessarily need a completely new attorney every time you make a loan. What you need is counsel who can tell you whether your structure, documents, lien, licensing and servicing are valid in the state where you’re lending. Those rules are not uniform.

    Also, “non-owner occupied” does not automatically mean “unregulated.” Federal law does exempt many loans made primarily for a business or commercial purpose from major parts of Regulation Z and RESPA, but the purpose of the loan still matters, and state lending/usury/licensing rules remain a separate issue.

    The cheaper path is usually not “find cheap documents.”

    It’s:

    1. Pick one state.

    2. Pick one loan type.

    3. Have a competent lending attorney build/review your first reusable package and closing workflow.

    4. Use a title/escrow company that regularly closes private-money loans.

    5. Require lender’s title insurance and proper hazard insurance.

    6. Define underwriting before you ever look at a borrower: max LTV/LTC, valuation method, borrower liquidity, rehab controls, exit, reserves and default plan.

    7. Decide who services the loan and handles payments, notices and payoff.

    8. Then reuse that system where legally appropriate instead of reinventing it every closing.

    And since you said you don’t have the capital yet, that’s actually an advantage. Don’t rush to make a loan.

    Build a mock one.

    Take a real investment property, pretend someone asked you for $100k, underwrite it, order a sample title report, build the closing checklist, calculate what happens if they stop paying, and have an attorney tell you what you missed.

    Your first lesson in private lending should not cost you principal.

    The documents feel expensive because they’re the visible cost. The expensive part is discovering after funding that your lien, underwriting or enforcement process wasn’t what you thought it was.

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