As a PML, you should....
To start as a private money lender, educate yourself on real estate investing and lending practices, define clear loan criteria, and conduct thorough due diligence on borrowers and properties. Draft precise agreements outlining loan terms, manage risk by diversifying investments, and build relationships with real estate professionals. Ensure compliance with local laws, start with smaller loans to gain experience, monitor your investments regularly, and trust your instincts as you navigate this venture.
I myself, as a PML. Giving the best quality of service to people is the top priority!
Most Popular Reply
#2 Creative Real Estate Financing Contributor
- Lender
- Eugene, OR
- 1,454
- Votes |
- 2,199
- Posts
#2 Creative Real Estate Financing Contributor
- Lender
- Eugene, OR
Virginia,
That was a perfect, succinct summary of good PML!
Thanks!
Mike
#2 Creative Real Estate Financing Contributor
- Lender
- Eugene, OR
- 1,454
- Votes |
- 2,199
- Posts
#2 Creative Real Estate Financing Contributor
- Lender
- Eugene, OR
Virginia,
That was a perfect, succinct summary of good PML!
Thanks!
Mike
Let's be the best we can be in this great craft Mike! :))
Im curious what is the difference between hard money lending and PML
Don’t mean to sound naive just want to learn a little more about different types of funding
Thank you in advance
Great advice. Also do not take documents off the internet, get an attorney to draft documents for you and also always close with a title company. Its the "blocking and tackling" and going with the basics that keep you out of 90% of the problems that we see people have.
- Chris Seveney
Virginia, I would love to hear about a deal or two that you funded. Be interesting to see the inner workings of the deal and how it was underwritten.
The big question in life, not to be or not to be, not nature vs nurture, no, what is the difference between a HML and a PML?
Answer is, could be nothing and another answer is could be everything. There's lots of definitions and distinctions between the two that get thrown around. In the end, it is up to how the investor themselves classify the lender.
HML is thought of being more "institutional money". I know of. very big HML that was funded by a billionaire with just 100 million to start, it was like 15 years ago and they are still around today and doing billions per year in loans. Now, this was all done with someone's private money so is it private money or hard money?
To me, PML is a friend of a friend or an Uncle or a co-worker's father. There's some connection you have to this person with money who is looking to invest it short term and collect an x% return. You and this private person you met hammer out the details of the loan at the kitchen table so to speak and you seal it with a handshake and your reputation that this Private Person already respects or whomever introduced has vouched for you.
But if a man opens a lending company tomorrow with 50 Million of his own capital and he checks in on the HML market to see what it bears and he copies his products and UW guidelines and now is he PML or HML? That's why the personal connection with the verbal deal and personal reputation on the line matters for me in classifying as a PML situation.
Hi Virginia! I completely agree with your approach to private money lending. Educating yourself on both real estate and lending practices is key to making informed decisions. Starting with smaller loans and building relationships with real estate professionals is a smart way to gain experience and diversify. Keeping service quality as a top priority definitely sets you apart as a reliable PML. It’s exciting to hear your perspective and how you prioritize trust and professionalism in your lending practices!
Yes, because Private Money infers that you are in a negotiable deal where your project can be outside the box and you can negotiate unique terms with a private individual - that - or a big box lender with strict rules and guidelines. It's a false circumventive solution, honestly. I have worked for lenders, I've brokered, and I have worked with real and true private money and even closed loans funded by a hedge fund of a syndicate of investors.
The process is relatively the same. Underwrite the asset. Review Borrower profile. Assess risk. Vote yes/no.
I am talking to a true PM lender based in FLA that I'd like to work into my group. He invests his own capital. He'll lend in markets where there's a network set-up that has proven to move investors through. He flies out and sees the house himself. I was surprised at that. But he likes to fund those small deals that lenders won't do. He won't do undesirable designations. He's three points and 12% to start and he will not supply rehab funds on the first one. But he will there after if things go well. I like him cause he will lend to my Canadians. He does 65% leverage maybe 70% but doesn't matter how low purchase price is. So I was negotiating with him yesterday and yes this is the one perk in that when I speak to Kiavi, RCN, Roc, Easy Street, I'm never speaking to the guy in charge. It's either a loan officer or processor. But in true Private Money you can get the top guy on the line which is nice, but don't expect them to budge. They have a formula that works and provides them the rate of return that makes it worth it so, don't feel like you'll just negotiate them out of their shoes like you're Trump. They are just as steadfast and stubborn as big box.
Building relationships with experienced real estate professionals is something I’ve also found to be invaluable for finding solid deals and staying informed about the market.