All Forum Posts by: George Despotopoulos

@Dmitry Maz Private money is everywhere! If you're looking for someone local I would check the BP forums and its various sections. Otherwise, there's a bunch of online lenders or private financing companies, that would be willing to work with you. 

Terms are generally: 7-9% interest rates, 1.5% - 2.5% origination fees, $50K minimum loan amount, 70% or 75% max LTV.

For fix & flip you would probably need a hard money or bridge loan. Those also exist both online and in your locale, terms are 12 months, interest only with the principal due @ maturity in a balloon payment. Rates 10% - 14%, origination fee of 2.5% - 5%. 

The terms vary between lenders.

Chris, hopefully individuals with experience in pitching partners will chime in. 

I can speak from a lender's perspective. Obviously the more skin in the game a borrower has the better.  As your first deal, and since it's a family member, I'm assuming you don't have to worry so much about lack of experience. 

It really depends on how much capital you have saved up to put towards this deal. I think even if you can put some amount then that looks good. Also, I would assume it would mean you share a bit more in the proceeds too. He's put confidence in you here and wants to move forward. It seems like he's already comfortable. The most important thing is that the idea you pitched is backed-up with enough analysis and effort and you have a clear plan in mind. I would stress less about putting in the financing (since like I mentioned he seems ok with doing so), put in what you can to show you're willing to share some of the risk, albeit small, but maximize your efforts with regards to  the strategy.

Hi @Vanessa Blais I too was confused a bit! Happy to lend my opinion. It seems like you posted an ad looking for someone willing to lend their money to a borrower/deal you would find. This seems a bit like you're brokering. 

Hey @Jim Bryson I would not have done that but if you did, live and you learn! At least it seems it was not an amount that will drown you here. 

Investing and financing are tough industries. You did notice something weird, now you know you  were right. With financing, any lender big or small, who is offering you terms that seem too good to be true or are a bit too aloof or nonchalent about the whole process should be warning signs. Lending is a competitive business, with a lot of risk, and a lot of legal issues to be mindful of. Thus, most good lenders, whether it's a private individual or private company, usually take an approach to ensure everything is appropriate about the deal. 

Again you did notice the weird things like them not inquiring about the construction plan, their offering of such low rates and origination fee, and you had the wherewithal to come here and ask about the upfront fee. Even with poor credit or low income, there are asset-based lenders out there that will go through the process properly with you. The rates will not be that low if your credit is under 720 or so, so expect 7.5% - 9.5% range and an origination fee of at least 1.5%.

It's not as simple as a boilerplate mortgage and note. There is specific language, and also clauses, to account and provide for. Also, depending on the type of loan/property, there are potential riders to include or draft to be attached to the mortgage (and potentially note). If you're in a non-judicial state, which Illinois is, you want to ensure you're fully protected. Your state does not conduct judicial foreclosures, which is preferred for lenders. You do not want to lose your entitlements/rights.

Also, there are certain other agreements I may consider to have the borrower sign @ or prior to closing depending on the deal. 

I would definitely look this up, if you want to try and take a crack drafting it and putting together the mortgage / note go for it, but in the end I would have a real estate attorney review and make any edits.

@Towanda Glenn 

Usually you still need a good amount to put down. Private lenders for a loan amount of under $50K will be hard to find. 

Private lenders can be found on bigger pockets (visit the different sections associated with lending; also check the marketplace) or google. 

Like Rogelio mentioned, you can also look at options other than hard money or private money. 

Let me know if you have any questions!

@Myranda Miller

I am unable to post contact details such as phone numbers or email addresses outside the Marketplace section of the website. Any chance you can pm or e-mail me or provide me with your contact info so I can send you the list of attorneys I have.

Hey Keyan! There are many private lenders in PA. I would do a search of the forums or marketplace, of course google. 

Usually with private lenders you fill out a form with all the requisite details and are pre-qualified that way. Some do require you to fill out something akin to the 1003 form and list out your assets/liabilities and pull credit. 

Keep in mind, most lenders will go up 70-80% LTV depending on the loan amount (if it's under $100K expect to be required to put 30% down). Also, the minimum loan amount is usually $50K. Some lenders required $75K.

Rates around 7% - 9.5%

Hey @Jeff Brown private money won't finance your downpayment; most lenders only go up to 70-75% of the purchase price, you'll need to come up with the rest. 

Also, a private money loan will impact you in terms of debt. It's just like any other loan/asset/liability. 

You can get a private money loan at a 10, 15, 20, or 30 year term or even a short term loan of 12 or 6 months. The rates will vary, long term = 7% - 9.5%, short term = 10% - 14%.

Hi @Amy McArthur what portion are you looking to refinance and what loan amount? Most lenders will go up to 80% LTV on a bridge loan (for buy/rehab/refi); minimum loan amount of $50K.