Advice

[Sanjay Patel]

Hello,

I have been lending to local small companies who rehab and flip houses.

I wanted to know if there are any resources or advice on how to vet deals,and how to structure them?  I realize every deal is different.

I've also run across several different scenarios and would like your opinion:

1. lending to a small lending company where they handle all interactions with the rehabber and I do not get a deed of trust and monthly interest

2. lending to another smaller company (again they handle the entire rehab), I do get deed of trust, higher interest, but interest is paid out at the sale of the house

3. a local private placement fund (lowest interest of the 3).

In cases 1-2, I get to see the property, case 3 not so much. These are generally 9-12 mo deals.

I have good relationships with the above and successfully participated in a few of these deals, so I haven't learned much about what could go wrong.

How do you gauge risk of the above scenerios? How important is it to actually touch and look at the property you are investing in? Should I be speaking with the actual company doing the rehabbing? what are the risks in these scenarios?  

Many thanks for your advice.

Sanjay