what are the main concerns for a private lender? (not hardmoney)

what are the main concerns for a private lender? (not hardmoney)

NJ · Member since 2019 · 61 posts · 19 votes

I have interviewed several hard money lenders, and as expected, none are willing to finance an entire deal (purchase + rehab). I am including the money costs in my calculations to fund a deal and remaining amount needed to fix/flip is still out of my range and financial ability. With that said, I've started looking into utilizing a second source of funding where i have private lenders invest with the remaining portion. I know, there will still be cost involved but it would be worth it as i would gain experience.  

My questions for the BP community are listed below. I can/will research the topic by looking online and interviewing investors, but i was hoping BP could point me in right direction. This way i am prepared when i present to him/her. Thx in advance.

1. what are the main concerns a private lender would have?

2. Are there "companies" that i could partner with to provide the remaining funds.. outside the funds the HML would provide? Every HML looks like they require first mortgage on the property. So are there companies that wouldn't require first mortgage, can close quickly, minimal terms, etc.

3. Any posts, articles, or videos that are recommended i look up?

Thx

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  • Real Estate Broker · Gulf Shores, Orange Beach · Member since 2020 · 65 posts · 18 votes
    5y

    Hello, a hard money lender should not have a problem lending for a purchase and rehab as long as it makes sense. Do you know the ARV, and your repair cost? Are you getting it for a price that makes your deal work?

  • Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
    5y

    @D Higgs Top priority for a private investor is their trust in you to complete the project and return their money. They don't want you to disappear or leave the project incomplete and their money is tied up in the property. That's why investors want someone with skin in the game. If they put up all the money, you have the ability to walk away with minimal loss. 

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