What ratios to look at for loaning private money? LTV, LTC?

[Dewayne Perry]

I'm wanting to get into PML. I understand the after repair LTV should be no more than 65-70%. But I'm more confused on the LTV prior to rehab. Let's say a property cost $300K and needs $150K for rehab so total cost $450K. I saw another post where someone recommended to cap the LTC at 88%. So $396K, leaving the borrower to bring $54K into the deal. But the problem there is what happens if the borrower immediately runs off with the money? The $300K went to the seller and now the borrower has $96K in his pocket. If I foreclose on the home I'm still going to be out quite a bit of money. So I think I'm missing something here.

Is it the case that rehab costs are only given as reimbursements as opposed to upfront? So loan 88% of $300K, which would be $264K, borrower puts up $36K as a down payment, then self funds the $150K rehab and I reimburse after he pays for the rehab? Is that how it works? If so, at what point exactly would I be reimbursing the borrower? And if they have the money to pay for the rehab upfront, why do they need to borrow money from me for the rehab? 

[Robin Simon]

Quote from @Dewayne Perry:

I'm wanting to get into PML. I understand the after repair LTV should be no more than 65-70%. But I'm more confused on the LTV prior to rehab. Let's say a property cost $300K and needs $150K for rehab so total cost $450K. I saw another post where someone recommended to cap the LTC at 88%. So $396K, leaving the borrower to bring $54K into the deal. But the problem there is what happens if the borrower immediately runs off with the money? The $300K went to the seller and now the borrower has $96K in his pocket. If I foreclose on the home I'm still going to be out quite a bit of money. So I think I'm missing something here.

Is it the case that rehab costs are only given as reimbursements as opposed to upfront? So loan 88% of $300K, which would be $264K, borrower puts up $36K as a down payment, then self funds the $150K rehab and I reimburse after he pays for the rehab? Is that how it works? If so, at what point exactly would I be reimbursing the borrower? And if they have the money to pay for the rehab upfront, why do they need to borrow money from me for the rehab? 

 Yes, you are on the right track - you want to do a disbursement "draw" process - where the funds are typically released in installments, and based on verified completed steps of the renovation