Effective Strategies for Structuring Deals with Private Money Lenders

[Scott Tennell]

For real estate investors who have worked with private money lenders, what strategies have you found most effective in structuring deals to ensure both parties are protected and the funding process runs smoothly?

[Andrew Postell]

@Scott Tennell there might be two different definitions here to the PML term.

So, if you mean you are reaching out to PML that lend money all the time and have experience doing it - then they will tell you what their requirements are.  They will also dictate the terms of the loan, how it's filed, qualifications, etc.

However, if you mean PML as in your friends/family that have NO experience in real estate and just have money sitting around...then I would certainly to counsel you to lean on some type of mentor or other experienced investor in Houston on what to do.  Generally, this type of counseling might have a little fee to it but it's well worth it if it protects you (and them). 

So, if it is more of the 2nd on there...I'm sure that some people might comment to "Do This" or "Do That"...but how do you know if any of them are correct?  The number of people who have called many of us saying they saw some article online or watched some tickytok video and did something COMPELTELY wrong is staggering.  STAGGERING.  Texas has some screwy laws (are you even investing in Texas?)...but working with someone who is local to your market, who can show you their legal documents that they have used, introduce you to a proper title/attorney office for drafting documents...I mean, nothing is foolproof...but that route will have a significantly higher success rate. 

Try some local real estate meetup groups in Houston.  There are many. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. Eventbrite too. But post locally for this. That’s the best bet.