All Forum Posts by: Jonathan Chan

As private money lenders, protecting your investment starts with careful borrower vetting. Here are some key red flags to watch for:

🔴 Lack of experience: A borrower without a proven track record in real estate projects may struggle to navigate unexpected challenges.

🔴 Overly optimistic projections: Unrealistic ARV (after-repair value) or underestimated rehab costs can signal poor planning—or worse, a lack of transparency.

🔴 Incomplete or disorganized documentation: Missing detailed plans, financial statements, or timelines could mean the borrower isn’t ready to execute the project successfully.

🔴 Over-leveraged finances: Borrowers with excessive debt or insufficient personal capital invested in the deal could pose a greater risk of default.

🔴 Questionable property comps: Overstated market values or inappropriate comparables may mean they’re inflating expectations.

As always, thorough due diligence is your best protection. Working with vetted, trustworthy borrowers and maintaining a robust vetting process will help ensure your capital works as hard as you do! 💼💰

 You got your money plus return back. Where did they get the funds to repay you?

 I honestly don't know how enforceable it is, but 24 hours to respond to any sort of communication is more than reasonable in my opinion. Yes, we also make sure there are multiple exits. I personally like lending on BRRRRs because it's more predictable. You can do everything right on a flip and just have the timing be bad or just have it sit for no good reason.

Weekly updates AND a requirement for the borrower or someone from the borrower's team to respond within 24 hours of being contacted.

If you're interested in adding real estate lends as another tool in your toolbox, these are the steps I've learned you should take to vet your borrower before looking at any of their opportunities!

• Background check
• Credit check
• Past performance. Look at purchase HUDS, statement of work if it was a renovation and the sale HUD to make sure they made money on the deal.
• An organized and easy to navigate borrower's package.
• Security documents to collateralize the loan against real, tangible property.

I also like to throw in some communication clauses with consequences for ghosting.

Cheers!

 I would lend that 130K in short term lends at 16-20% annualized turning that money over every 6 months and use the returns to buy real estate.

 Would love to connect. I'll DM you my calendly.

Have you looked into lending? Owning property is amazing, don't get me wrong. I'm fortunate enough to have the portfolio I have, but the headaches and R&M associated with owning property are pretty high. If your goal is cash flow, I would look into other ways. Use the purchase of rental property to offset taxes, not for cash flow. Cash flow is used to protect your investment, not live off of.

YES, what do you want to do? Why do you want to get into real estate? What does your dream life look like 5 years from now? Work backwards from there. 

I used my Mom's to help her retire by becoming a lender on real estate projects, but curious to see how others are leveraging their SDIRA.