All Forum Posts by: Ronald Isgate

I work with and represent alot of private/hard money lenders.  I know of several that started out "small", so i would not let that deter you.  Conversely, i often see it harder for borrowers to find lenders willing to lend amounts <50K (its a cost benefit issue), so there is a gap there you could capitalize on.    The other option you could explore is investing in a lending fund - while you would not make as much as if you were yourself the lender, you would still make solid, guaranteed returns in the 8-10% range.

If you do begin to lend, my biggest piece of advice is make sure you fully vet the borrower and the project --- that goes double if the loan is for a fix and flip.  Also make sure you get with an attorney who normally does this type of work, so you have a solid loan package that best protects you in the event the loan goes south - the borrower normally pays your legal fees for doc prep, so that wont be a cost you need to bear.

Best of luck starting your new venture!

@William J Steiner Jr - feel free to message me, I should be able to help you out.  I am located in Doylestown.  

You absolutely need to document the transaction.  The lender should really tell you what his/her terms are for lending you the money (i.e. interest rate, term to maturity, amortization rate, interest only payments, etc. etc.).  Since he is a lender (and not an equity partner of yours), you should have a note and mortgage, which would get recorded against the property.  I would recommend you speak with a real estate attorney in your area so that all the key terms are contained in the documents so that you and lender both know each other's obligations and expectations.

Best of luck!

You will have a pretty solid "to do" list to get started:

- As said above, first and foremost, educate yourself on the business and how it operates.  A mentor is always a good thing.

- Find a solid Attorney that knows how to set these ventures up, and a good accountant to keep everything straight

- Network, network, network.  Both to find investors, and to find Properties (if you are doing a RE syndication as opposed to raising money to lend of course).

- Start talking to lenders.  Find out what ones are interested in the types of properties you are looking to buy, and find out what their programs are - this is critical in evaluating the property(ies)

Best of Luck!

Some of this will depend on your location. I represent clients in PA and NJ, and there is no way it should cost you 10% of a transaction for preparation of an operating agreement. I agree that you do need to find an attorney now that you trust and you can grow with - the costs should not be astronomical - especially if its just you as a the sole member in the LLC. When you have other members/partners, that is when you really want to have an attorney prep the documents to ensure all your rights and obligations are listed out.

In my practice, I find that it is just as --- if not more --- important to get a really good CPA on your team. He/She will be the ones that save you the most money in the long term. Depending on how your taxes are set up, a CPA could recommend forming an LLC or an S-Corp (from a legal standpoint, they offer identical protection, but could offer differing benefits from a tax standpoint). A good CPA is invaluable. I regularly work with my client's CPA to ensure we are setting everything up properly from a global standpoint. Your CPA and Attny should work hand in hand in getting you set up initially, and so you can grow going forward.

@Tracy Dickerson   I represent/work with quite a few private/hard money lenders - ones that have been around for 10+ years with a solid track record that are local to PA/NJ/NY.  I could certainly help if you would like, just shoot me a message to connect.

Where are you located?  I think it is possible, but from the lenders I have worked with, I would say that the cash out is possible, but the rate would be in the mid 4's to low 5s and a 25 year AM (not 30)

I agree with @Evan Polaski - not sure why you would want to go this route. It is wrought with potential problems. Depending on your location, every transfer (from personal to LLC , and from LLC to LLC) would trigger transfer tax - which could ruin any cost benefit for you. Non recourse only really comes into play when its asset based lending and the loan amount is pretty high - like 10mil and up - and even in that situation you would have to show a solid track record. You may be over complicating this with all the moving pieces.

I have quite a few clients up in that area - here are a few that they use, i have not heard any negatives from my clients on these - Slatehouse Property Management and DLP Realty.  There are a ton up in the area, since its a very hot investor market at the moment.  Make sure you get full pricing from any of PM you speak with ---- they tend to vary (i.e. one could be 10%, but there are no "add ons" so to speak, and another could be 7% and have alot of additional charges).  Best of Luck!

I would suggest you call around to all the local banks and CU's.  Often times the local banks will have promotions/specials for limited periods of time - you could get lucky and find one that has a lower down payment for an under 4 unit non owner occupied.