All Forum Posts by: John Jacobs

@Jeff S.

Interested in your response to my last post.

Let me clarify something--This would have been the first time I would have lent to a borrower who was living in the home (i.e. Primary or Personal Residence).  I have never done this in the past.  Although worded poorly this was the reason I posted as this would have constituted the first time and I thought there could be a problem doing so.

@Jeff S.

Thank You Jeff.

You said:  "Even lending to an LLC, which Dodd-Frank explicitly excludes, will get you hammered if the intent of your borrower is to use the property as a personal residence."

Given what you have said I will put it this way--I have never lent on a property nor would I lend on a property where that property was the Primary Residence (I am considering the phrase Primary Residence to be interchangeable with the phrase Personal Residence) of the borrower.

Adhering to that trumps all else--yes?

@Jay Hinrichs

Jay,  Thank You  John

@Alan Nelson

Alan,  Thank You John

@Patrick Roberts

Patrick,  Thank You  John

@Kerry Noble Jr

Kerry,  Thanks for your input.  John

@Carlos Scarpero

I am not sure that I am completely clear on your question as you phrased it but I will answer it this way:

Two big advantages of getting a loan through a private money lender are:  (1) Speed (2) Flexibility.

JJ

Hello Bigger Pockets,

I am a Private Money Lender.  I only lend to real estate investors.  I only lend to business entities (i.e. LLCs and Incorporated).  I do not lend to individuals.  I also only lend on non-owner occupied properties.  I do all of this so as to avoid/not-having-to-comply-with the the provisions within the Dodd-Frank Act which require lenders to vet borrowers as to their ability to repay the loan.  That is, the Provisions, to my knowledge, require a formal vetting of the borrower taking into account that borrower's Debt to Income Ratio, along with other metrics.

The following situation has arisen which is this:  I have lent to a flipper on several flips in the past.  When lending to him in the past I have adhered to the rules I have stated above (see Paragraph 1).  He owns a primary residence which he currently lives in.  He just bought another home which at some point in the near future will be his primary residence.  Ultimately he will sell his current primary residence and then move into this new home.  The new home needs renovation and he was was wondering if I would make a loan to pay for the renovation of his new home.  He owns the new home in his name as an individual.  There is the possibility that he could move into his new home while my loan with him is still in effect.  

I am inclined not to make this loan (see Paragraph 1 above). Having said that, I am wondering though, would me making a loan to him (see Paragraph 2 above) circumvent the Dodd-Frank provisions because he didn't buy the home with my money (rather my money is only being used for renovation post-purchase)? Lastly when making this loan there would be a Mortgage and Promissory Note in place. The Mortgagor would be listed as an individual (as the individual holds the Deed to the home) and not be a LLC or Incorporated. So would this give you pause vis a vis the Dodd-Frank Act?

Thank You

JJ
 

@Adaze Foltz

@Mitch Messer

As a private money lender I agree with Mitch's two points.

@Patrick Lucas

Patrick,  Those numbers look great (Monthly Cash Flow of $570).  Congratulations :-)