All Forum Posts by: Derek Dombeck

You should treat family loans as if they were any other lender. 

You should provide a Lenders Title Insurance policy, a note secured by a recorded mortgage or deed of trust, and add them as Lenders on your property insurance policy. 

All of this will cost you a little bit of money, but it protects them and their money.

Its in my signature line @James Carpenter. 

@James Carpenter we do some out of state lending, but our main area is WI.

It's case by case depending on the lender. We don't ever impose a prepayment penalty. We have had people use us to wholesale within 2 weeks of us giving them the loan.

Don't be sucked in to a balloon payment if you don't have to. Many sellers don't want or need a large chunk of money down or a balloon in a few years. Everything is negotiable. 

That will depend on the lender you use to refinance. Also make sure your Hard Money loan doesn't have a prepayment penalty. 

Hard Money lenders are not like banks, where there are standard lending practices. We all have different underwriting criteria depending on our niche. So you need to find one that likes your area, type of property, experience level,  etc. 

The problem with podcast education is that, nobody can teach or learn all of the do's and don'ts of any topic in a 45 minute interview. And, typically whoever is being interviewed only talks about the good parts of their business and leaves out the negative. 

Bottom line, this is a relationship business. The more you expand your real estate network, the easier it becomes to find money, deals, contractors, partners,  etc.

Keep going!

@Austin Jones, our loans are typically for purchase and rehab and are for a 6 month term.  If you didn't want to use all of your cash for the initial purchase, you cod use this bridge loan until you have the project rehabbed and rented out. Then go to your bank and get long term financing.

Our landlord clients use us specifically as a Bridge type loan to allow them to purchase, renovate, and stabilize a property before they get bank financing. It has been working great. I don't know why a bank would care, because they are getting the loan AFTER the risky part of the transaction is over.

That is a typical arbitrage business model that works well. You definitely need to figure out how to protect your money source and yourself. We use a combination of collateral assignments and a servicing agreement. It's absolutely lucrative if done correctly.