Private Lending

[Lakeisha Alston]

Hello,

I am interested in becoming a Private Lender, and I've been communication with someone who connects borrowers with potential lenders. She has attended a few of the REI meet up groups, and I've spoken with her on multiple occasions. Recently, a possible opportunity has presented itself, but I am somewhat weary because she does not seem to be communicating well. In our initial conversation about this opportunity, she gave me the amount the borrower needs, and the timeframe in which the borrower will need the money. The conversation lacked the information I was looking for, and she couldn't directly answer my questions about the documentation needed to secure my investment. There seemed to be a big push on "the borrower needs the money". I asked about the Promissory Note, etc., and she has yet to provide a response to my requested documents. The only document she confirmed she would be able to provide is a transfer of collateral, which I would receive at some point during the rehab. Today she emailed me, and stated the funds would need to be wired to escrow by Thursday.

The loan amount is 10K at 6%

Timeframe: 6-9 months, with a possible 1-2 month extension

Red flags have raised in my mind, but I want to make sure I am not over thinking this situation. In my opinion I am requesting documents that should already be a known and necessity in private lending, but she doesn’t seem to be forthcoming with the documentation I am requesting. Is it a good idea to work with a middle person? Am I over thinking this situation? Is 6% too low of an interest rate?

Any thoughts or feedback on this situation would be greatly appreciated.   

[Hattie Dizmond]

You are SOOOO not over-thinking the situation.  Run away...fast!

You're a Private Money lender.  You specify the terms under which you are willing to lend the money.  That includes what collateral you require and what documentation is required.  The borrower needs you more than you need them.  There are plenty of people who will gladly take your money!  

PS...that 6% is really cheap!!!