How Do I Become A "private Lender"...
Allright, let's say I have cash and would like to loan it out to investors. Where should I start? I have defined my borrowers/loans as such:
Max 70% LTV
No longer than 12 month term
Must have RE experience...not "beginners"
If you were me, what else should be consdered???
Let me have it!
You may want to escrow the total amount of fix up money required to bring the property to full value. If you are lending to the fixem up crowd you may want to provide a prepayment of some type just in case the mortgagor wants to use your cash to secure then sell the subject property. Something like a first mortgage without exception, hazard insurance with the mortgagee as the loss payee to the amount of the note, minimum of 3 months interest to be paid to the mortgagee, repair money kept in escrow to be released in draws at the mortgagees approval,ect….Hope this helps some. <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by rickomarsh on Date 01/08/2004 ]
Loan me money to do deals are you are a private lender.
You would want to decide the rate of interest and the points you would charge. You would also be considered a hard money lender. I would charge about double the mortgage rate on normal loans with 3 to 6 points. You may want to stay in your area too as it would be easier to foreclose and take over the collateral if necessary. Credit of the borrower would not be as critical as with the experience part comes knowing how to do deals.
Good LUCK and Thank You
Hope this helps some
Ted Jr
Since your in OH check this link to make sure that you do not break any rules.
http://www.com.state.oh.us/dfi/
Also have it in your contract that they are not to live in the property. [ Edited by lacashman on Date 01/07/2004 ]
I think staying local would be best as well. If dealing with the rehabbers/flippers , I could keep the loans to lower amounts at first, then increase accordingly. Any idea on types of licensing, etc... required, if any??? I guess not, thus the term "private lender"...
Cashman-
I had checked that link, but thanks. The closest thing I saw was "Small loan companies"...you need a license and $25K "readily available"...didn't give much more info so I'll call them. Thanks again.
Is being the "money man" in a limited partnership related to or the same as being a "private lender"?
As you may guess, when investors learn you have money to lend, it becomes standing room only. It's up to you to set your criteria and standards.
In a limited partenership your contribution would be the extent of your liability (assuming you're a limited partner) and you would assume a passive role. One your first few deal I suggest that you don't go over 60% ARV.
As a hardmoney lender, you are the banker and you need to see that your security is adequately protected.
My PMs have seemed to increase Sammy!
I like your 60% rule. I think I will adhere to it in deal #1. I may not go over 30% of my available cash at any time, for awhile either. Thanks again.