All Forum Posts by: Beth Johnson

@Denise Carringer

My preference is to go local - some community banks offer this type of service or local escrow companies, which is what I found, because they offer a higher level of service than most national.

At the national level, it's the best of the worst in that industry - a lot left to be desired in the customer service department but still better than doing it on your own. Try Note Servicing Center out of California or FCI.

@Scott Loud

Have you considered working with a private money lender that does direct placement of whole notes with capital partners? This may reduce the time between deals as they often have more loan opportunities than capital on hand.

Also, if you haven't done so already, check out my book published by the BiggerPockets that is a comprehensive guide to finding and finding a PML safely and securely. It's called Lend to Live: Earn Hassle-free Passive Income in Real Estate with Private Money Lending.

@Denise Carringer

I'd suggest using a third party contract loan servicer. Plenty exist for private lenders (which is what seller financing is) and can track payments and am tables and also do automatic electronic withdrawal (ACH debit) which helps improve the likelihood of getting paid promptly each month. Additionally, most servicers will provide the tax documents needed at end of year (1099-INT, 1098-INT) and can also issue notices of NSF, late payments and support delinquency /default. Also, they do the payoff demands when the loan is being paid off and I appreciate not having to generate these myself. I think any seller without much knowledge of being the lender would appreciate the added benefits and hassle free approach using a third party.

@Jamie Brasseal

As others have mentioned, it depends on a number of factors and the best course of action would be to consult with a foreclosure attorney in Ohio. Not just any real estate attorney but one who has a history and regular practice of this type of transaction in the state you have a loan on.

Great post! The difference in opinion between a lender POV and an investor POV is the amount of down payment required because it's underwritten by the lender using an appraisal and potentially DSCR for a long-term rental = a higher down payment. So, yeah, you can value a STR higher as an investor, as mentioned by commenters, and it'll cashflow great as an short-term IF AND ONLY IF you have enough down payment to cover what's required by the lender. Can't really separate the two points, in my opinion.

Do you mean active investors as the borrower or passive investors acting as the lender? From the borrower point of view, PML is easier and more creative often times than hard money lenders can be since it's their own capital they are using and not institutional. It could be cheaper too depending on who you work with and how well you know them. Cons to PML is that most have a finite amount of capital to lend out and so you can't get more than 1-2 loans out with them before they run out of funds. Another con is that they aren't always experienced - especially if you are raising private capital on your own you might tend to be the SME on real estate transactions- so they can be slower and less educated in this space, making them a bit more flakey at the closing table, occasionally, because they aren't well versed on how real estate investing works. 

Thanks @Julien Jeannot! @Erik Estrada - let us know if we can help. We are a balance sheet private money lender so we can get pretty creative with our financing. Feel free to PM me. 

You will want a Promissory Note, Deed of Trust or Mortgage - depending on what state you, the lender and the property is in, title insurance policy (lender policy), and property hazard insurance binder with the lender listed as a mortgagee. You may want to check out the book we published on BiggerPockets last year called Lend to Live: Earn Hassle-Free, Passive Income in Real Estate with Private Money Lending. I have heard that regardless of which side of the private money transaction you are (borrower or lender), our book does a great job of helping to explain the key considerations to funding a private loan. Being able to empathize and articulate how you will safeguard your lender's capital will go a long way in helping you to secure additional capital down the road. You can purchase the book at www.biggerpockets.com/lendtolive.

@Joan Garcia Hernandez

Depending on the state you are in, there may be more specific term requirements needed to safeguard your loan so I would recommend consulting with a real estate contract law attorney who's experienced with Private lending in the market(s) you, the borrower, and the property reside in, if different.

There are legal and licensing considerations that are market/state specific and often times clauses or details that should be included to protect you. As an example, I often see home grown contracts in my state by individuals making a private loan that have no interest rate which could/would render the note unenforceable in my state.

Pays to get it done by a legal pro than pay legal fees after it's funded, when you're in trouble because of a note prepared online.

@Beth Johnson

Omg, a big typo in my original response. REWARDS is what I meant! I hate auto correct! 😭