Private Money Lending

[Nicholas Munford]

Recently I've been thinking about private money lending. With the uproar of investors buying property most need funding and a lot would rather get money from another investor instead of hard money and similar methods.

With that being said I have a few questions about being a lender.

How do I get started as a lender?

Do private lenders have interest?

When partnering is it necessary to have a partner entity set up?

Is there a way to ensure that if all goes wrong my original investment is secure, or is that a part of the risk?

Is there always a use of escrow?

What are some risk and dangers of lending?

If you can only answer one question that would be helpful. Also if there are any articles or books that you know of on this topic please let me know! All information is helpful! Thank you <3

[Theodore Rivera]

@Nicholas Munford I would suggest as @Adam Schneider suggested in reading up on the laws of where you will be lending. No two states are alike. If you are fortunate, you may find a local REIA that may help in that area. Here are a few questions that will begin to point you in the right direction.

What requirements are imposed on you as a lender by your state in order to lend? 

What are the state's usury guidelines? 

What does the state's foreclosure process look like?

Who handles real estate closings in your state?

Do you have a real estate attorney on your team?

Have you determined your set guidelines for lending?

@Kenneth Garrett also provides useful advice on being able to vet the borrower and deal. Do you have the knowledge and experience for doing both? 

Do you have experience in interviewing people? 

Do you have experience and knowledge in assessing rehab costs?

Do you have experience and access to your real estate data base for determining current property values? After repair values?

If you lack in any of the above, do you have someone you can add to your team to help you in those areas?

Best of luck and be careful!