private money to LLC

[Ron Lillie]

As a new investor I could use a little background as to the process of, when a private money lender has been found and agrees to invest, let's say $100,000.00 towards real estate, what is the process of accepting those funds and putting into my LLC towards real estate investing?

[J Scott]

Is the money being lent to the LLC for use at your discretion?

Or is the money being lent on a particular property where the lender will hold a lien against the property until repaid?

If it's the first, you'll likely want a Promissory Note and perhaps a Personal Guaranty. Once those are signed, the lender will send the funds to your LLC and you do with them what you want (within the bounds of the agreement, of course).

If it's the second, you'll likely have a Promissory Note and a Deed of Trust (or mortgage) signed at the closing table, and the funds will be wired to the closing attorney or title company to be disbursed as necessary. In this case, you won't touch the funds (unless there are funds for rehab that are to be distributed to you), and the lender will be repaid as agreed -- most likely upon sale and directly from the proceeds of the sale.