3 Common Pitfalls to Avoid When Working with Private Lenders

As many of you would I’m sure agree, private loans can be an amazing vehicle for both the deal provider (you as the investor) and the cash providers (your private money partners). Private loans can help you finance flips and rentals and expand your real estate investments. Private loans are great for lenders as well. They can be a terrific way for them to receive a high ROI on the money. But private loans (like all tools in real estate investing) should be used with caution and intelligence. There are pitfalls, common mistakes, and things to avoid when it comes to using private loans.

Related: How to Build a Million-Dollar Network of Private Money Investors

In today’s video, I share three of the most common pitfalls to avoid with private loans. These include:

1. Lack of documentation
2. Miscalculations
3. Holding the bag

The key is create win-win arrangements and do whatever it takes to protect your private lender’s money. I would love to hear from you as well.

What pitfalls have you experienced—either as a cash provider (private lender) or deal provider (you the investor)?

Let’s get some discussion going!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.