All Forum Posts by: Ram Gonzales

Hey Jim. Congrats on landing such a valuable partner. The simplest thing to do is to just ask him what kind of return would make him happy. Ask him what other options he's looked at and why he didn't go that route. That will remind him of the pain of those decisions and reassert you as a solution to his problem (albeit a First-World-Problem). He may just simply want a fixed rate return per year.

@Jay Hinrichs What kind of "infrastructure" do you set up when you plan to start lending or partnering in a new market? Do you first engage some local experts to be your boots on the ground so to speak or do you simply rely on your relationship with the borrower/partner? 

@Ken T. Yes, I would review and approve each deal to make sure the rehab budget is reasonable and includes a contingency, all of which would need to come under the 70%. 

Thanks @Bill Gulley

Good information to know. I wasn't trying to solicit anything here. Just trying to get feedback on my terms to know how they stack up against similar arrangements.

Thanks everyone for your feedback. 

I've been investing for ten years now but, honestly, I've always been better at finding money than finding deals. I'm finally embracing my strengths. :)

That being said, the reason I split the rehab money is simply from my experience in dealing with contractors on my own flips. I simply don't trust most of them, so I only work with contractors who will accept payment on these terms. It ensures that I only pay for work performed. I assume other investors can do the same and not have to come out of pocket - especially if the funds are first set up in escrow. Most people would say that if you are working with the same contractor all the time this shouldn't be a problem, but I have found that, unless you are doing one deal right after the other, that good contractor is already on another job by the time you find the next one. As a result, I'm always testing new ones. 

Bottom line though, I'd be far more flexible on this if I was working with an experienced investor as Andrew described.

@Andrew Cordle Thanks Andrew. You'll definitely be hearing from me.

@Jay Hinrichs Thanks Jay. I'm still feeling out the right path there in terms of lending vs partnering and which is more appropriate in which circumstances. I am definitely sticking to my home market for now and will possibly look at expanding once I've got a few JVs under my belt here. Fortunately Texas is a big state so there's plenty here to work with. :)

Hi. I've been investing for about ten years (rehabs and wholesaling). Now I am getting into private lending/joint venturing. Want some feedback on these terms.

- I fund 100% of project including purchase and rehab costs.
- Total loan amount not to exceed 70% of After Repair Value
- Rehab Draws: 50% at half and 50% upon completion
- Title held in my LLC. (Negotiable based on borrower experience)
- Execute Joint Venture Agreement
- Profit will be split based on deal and level of experience of borrower
- Agreement term is for 6 months, after which, borrower profit split is reduced to 50% and I assume management of the project.

Does this sound reasonable?

50/50 but will vary depending on the deal and the flipper.

I'm a private money partner seeking flip deals in San Antonio, Texas. Doesn't matter if you're a newbie or seasoned investor. You just have to have a REAL DEAL! Cash in just a few days. Profit split only.

Hi Lori. I am just getting into this business of private lending myself. I already know the ropes from being a borrower before but I would suggest that after a lot of general internet research, you meet with a good real estate attorney. They'll be your best source of info since they are probably already representing other lenders.

In my full-time job, I work in downtown redevelopment. Part of my job is to create and manage programs that encourage private investment and revitalization. I'd like some feedback on a program idea to stimulate the rehab of SFRs in and near our downtown neighborhoods.

Essentially the concept is for our department to serve as a hard money lender for flips in targeted areas. We would provide short-term no- or low-interest loans for the acquisition of SFRs, secured by the home. Funds would be available only for acquisition, not repairs, and could be disbursed in as little as two weeks. There would be no interest or fees for loans repaid in six months or less. Beyond that, a 3% fee would apply with the full loan payable in a year.

What do you think? Would this motivate you to target properties in the program area? What other considerations should be taken in putting together a program like this? How could we better mitigate risk?

Your feedback is appreciated. Thanks.