All Forum Posts by: Jeff S.

It depends on whether you are a direct lender, @Michael Santeusanio, in complete control of the funds, or if you are acting as a broker.

Direct (i.e., balance sheet) lenders, by definition, lend their own funds. They can make their own decisions, often do their own valuations, and can quickly evaluate a borrower and their deal. With no secondary bureaucracy, direct lenders can often turn a loan around in a few days.

Not only would we not know what to do with ourselves if we had to wait weeks for an outside approval, but our borrowers, who make aggressive offers, would kill us.

The fastest we ever funded was the next day. That was for an “emergency,” to save a deal when another lender flaked out. Our typical turnaround is three days, though we can work as fast as the borrower needs. We’ve never been the holdup, ever. This is a huge competitive advantage, for which we charge.

If you’re unable to lend your own money, consider establishing a balance sheet using a fund or other investor-driven model to streamline your business.

Too bad you missed the California Mortgage Association (CMA) conference last week, @Krystal Giron. It’s an organization of private lenders ranging from small private lenders who lend their own money, like us, to multi-hundred-million-dollar fund managers. You might consider joining since the education is excellent, as are the contacts, if I may say so myself. They just started offering a one-day class you might consider. Look online.

The American Association of Private Lenders is nationwide and the largest organization of private lenders in the country. They have an introduction to private lending class that they offer the day before their conference in Las Vegas, which is in early November.

When you attend these conferences, in addition to the presentations, you’ll meet lending attorneys, loan servicers, wholesale lenders, appraisers, accountants, document providers, and many more.

Fortra Law, formerly Geraci Law in Irvine, is the largest lending attorney firm in the country and their online webinars are fantastic. At minimum, I strongly suggest you spend some time watching their discussions on usury, licensing, and consumer vs business purpose loans. You’ll spend hours learning. Better than TikTok.

Since you are not licensed in CA, you will initially have to partner with someone who is in order to make loans here. Many brokers sell their loans. Once you decide what you want to lend on, you might call a few or meet them at a conference or local REI club.

We’ve published our process here a few times. Here’s a recent incarnation, and it’s still about 90% accurate.

Last, ignore all the crackpots and charlatans who DM you here, knowing you have money but no experience.

Best of luck to you, Krystal.

It’s time to stop trying to do it yourself, Albert. I can’t tell now if you actually made a loan or if you entered into a partnership agreement. You need to speak to a lawyer.

You are not in second position, @Albert Tristan. You are an unsecured lender with no position because you do not have a recorded deed of trust (in Texas). This is the only document that establishes your loan position. It is a lien against the property and allows you to foreclose. It also ensures that the borrower must pay you back when the property sells, even if it means they bring a check to escrow. Otherwise, a recorded DOT gives you the right to foreclose. Your unsecured note does not. This should be your highest priority, assuming your borrower is willing to sign.

It doesn’t matter what the 1st position HML says. Jay is right. Due on encumbrance clauses in some notes, which try to prevent a borrower from taking out a subordinate lien, are unenforceable for 1 to 4 unit properties. Your borrower can sign a DOT with no fear that the HML has any recourse, which they do not.

I don't know what you mean by amending your agreement. Loan position is established by the order the DOT is recorded. It's the only document that a title company will respect when the property sells and which will give you leverage. At the absolute minimum, a title company could arrange the DOT and also tell you if there are any other recorded liens against this property. The safer way is to use either a lending attorney (preferred) or a real estate attorney and a title company.

“I know this wasn't handled the best way. (it's my first private money deal) …”

I hope it’s not your last private money deal, Albert. I would never blame you, but I am curious about how you got sucked into making an unsecured real estate loan using credit cards.

The rest: insurance claims, reporting the agent, reporting the contractor, attorneys general, demands for remedy, and so on, will not get you paid back. These are low priority.

I'm not sure I understand what one thing has to do with another, @Tracy Thielman. Regardless of costs, rising or not, all deals hang on whether you have capital available, and the faster the better.

Quick funding has always been the go-to method to convince owners to sell to you. No rule, but sellers typically look first at the amount offered, then the time to close, and then the reliability of the money, with cash offers—not any sort of loan—being the most reliable.

Traditional banks have never been an option for house flippers. This is not because they are slow, they are, but because they don't lend on uninhabitable properties. Portfolio lenders aside, which are rare, I don't understand that response either.

Private money—from direct lenders who, by definition, lend their own funds—is the easiest option, and second-best behind funding with your own cash. Direct lenders make their own decisions, often do their own valuations, and can quickly evaluate a deal. With no bureaucracy or others trying to get a cut of the transaction, direct lenders can turn a loan around in a few days. This provides an important competitive advantage if you're flipping a house.

Malaysia is certainly among the more foreign investor-friendly countries in the region, with virtually no restrictions on both residential and commercial property ownership. The country has made itself an easy place to invest. There are several issues, however, including taxes, overbuilding, low returns, and poor appreciation.

Tax deductions on rental property are limited to 5 categories:

1. Loan interest
2. Maintenance fees & tax on maintenance fees
3. Quit rent & assessments
4. Insurance
5. Repairs

Notably, depreciation, which is among your biggest expenses, is not deductible. Nor are tax payments, which result in a tax on tax. Tax on the resulting income is flat at 30% unless you can claim tax residency by staying over 182 days.

The government also just added an additional 8% tax on rental income exceeding RM1 million, which caused an understandable uproar.

Malaysia has an enormous glut of properties with no end in sight to the construction, both residential and commercial. As a result, competition is fierce, and expected rental returns are around 6% at best. Property appreciation in most investable areas remains flat.

When you invest abroad, you must look at the local currency. Here, the Malaysian ringgit has ranged from around 3.8 to 4.8 to the USD, averaging around 4.0 per USD for the last 10 years.

If you want a great website with a wealth of information, consider Global Property Guide. It used to be free but now charges $29/month and is worth it.

When I hear "trophy property," I think of star-struck investors overpaying for underperforming properties in return for some sort of pride of ownership. With all due respect, @Colin Eilts, you did not disappoint. Pride of ownership does not pay the bills. Here's the practical advice you asked for: don't do this deal and don't ask anyone to invest with you.

"The objective here is to own and preserve a unique and historic property with provenance dating to before the American Revolution that is also able to pay for itself. I'm looking for practical advice on raising capital for off-market deals with valuation gaps …"

First, "off-market" doesn't mean "good deal." Doesn't spending $1.5M on a $1.2M property for a 3% return demonstrate that? The only valuation gap here will be closed in the seller's favor. Preserving historic real estate is much more challenging than newer property. Do you have a background here?

I'm sorry to be harsh, Colin, but for the risk you are taking, your objective should be to earn an above-average return with a substantial payback. Nothing you wrote illustrates that.

Please be careful, Colin. I recommend you rethink this one.

Add Shawn Watkins and Angel Bronsgeet to your collection. Shawn was mentioned on BP here. He and his partner, Angel Bronsgeet, were involved in several real estate clubs in the LA/Orange County area in the late 2000s and early 2010s. These were well-run, well-attended clubs that we went to regularly. Shawn was a skilled and compelling interviewer.

Both Shawn and Angel presented themselves as experienced real estate experts. Leveraging the perceived credibility that comes with running real estate clubs, they solicited many local investors into their Utah deals—including us and many of our real estate friends. We never took the bait, but we know several who did. This ultimately turned out to be a Ponzi scheme.

Angel later testified against Shawn.

After years of investigation, in 2019 Watkins and Bronsgeet were sentenced to 51 and 33 months in federal prison, respectively, and ordered to repay millions of dollars. I know some of the people who testified against them, though I don’t know if anyone has seen a dime of restitution.

This was an important lesson for us. Seminal would not be an exaggeration. We no longer invest—or lend, in our case—in anything we haven’t physically walked through or with anyone we haven’t taken the time to get to know. We learned that it’s an illusion to assume anyone standing at the front of a real estate club is necessarily an expert or even honest. I’m sure this lesson has saved us a lot of money.

Lightning Docs is the largest provider of online loan documents nationwide to the business-purpose bridge and DSCR communities. They periodically aggregate and publish their resulting loan statistics. Here's a link to the latest article from Nema Daghbandan, CEO of Lightning Docs, summarizing their statistics nationwide.

As you can see, nationwide, bridge rates have been dropping steadily for the last year to an August 2025 average of 10.43%. Volume was exploding until this past April and has now flattened at best.

Loan rates are local, @Michael Santeusanio, at least down to the state level. You don’t cite your location. Nema could provide you with the averages for your state, and in some cases, such as CA, by county and city, if you write to him and ask. These are only part of the answer.

Not included in any statistics are the competitive advantages offered by some lenders, so I'm not sure what you will do with just the numbers. For example, LTV, deferred payments, loan terms, fees, and several other factors could be reasons why some lenders can charge what they do.

The most accurate way to determine loan rates in your area is to speak to local lenders. Don’t limit your question to their interest rate since there is much more to a loan than that.

You’re making a bigger deal of this than it is, @Kwok Wong. Since it's tied to a different property, your HELOC won't appear on the title prelim, and most HMLs don't care where your EMD comes from; I can't say we've ever asked.

If you put 100% of the purchase price down as the EMD, the only way you'll get all of it back is if your lender offers 100% financing on your flip, which few do. So, if they make only 80% loans, for example, you'll get this back at closing, but still need to leave 20% in the deal from your HELOC.

Putting down a modest EMD, say 3% or whatever is traditional in your area, is a relatively small amount of cash that few sellers might be motivated to go after if the deal collapses. While a 100% EMD might be more appealing, it's also riskier for you, since it could motivate an aggrieved seller to pursue it. Of course, the likelihood of you defaulting and losing your EMD is small since you've already secured full financing through your HELOC before making the offer. Refinancing after the sale could also bail you out, subject to the lender's LTV policy noted above.

Whether putting down 100% provides a competitive advantage is something I’d discuss with your local agents. Alternately, showing a bank statement with at least 100% of the purchase price could serve a similar purpose.

Sellers generally focus on price and then time to close, but you never know. This could be a tipping point in your favor.