Private Lending Basics

[Account Closed]

Good Afternoon fellow BiggerPockets members!

I recently received an amazing opportunity to become a private lender in a flip in my neighborhood. I've done some basic underwriting and the deal looks solid. That being said, I am a new investor and would like to make sure my assets are covered. What are the basic things that a private lender needs to have with every deal? (i.e. documents, collateral, promissory notes, etc...)

Thank you for your help and guidance.

-Sean

[Greg Goldsmith]

Lots of sound advice here.  You might find value in a book by the lender Sal Buscemi, titled "Making The Yield."  I think a downloadable version is available on the amazon site.  It is very detailed, not just a "How-to" book but also a step-by-step "What-to".   It clearly lays out the many issues you need to be aware of when private lending, to ensure a safe, secure, and profitable outcome.  Not covered in the book is a more aggressive strategy of negotiating an equity position in your borrower's project (a negotiated split of profits on top of your interest), but that's getting ahead of things here today.  Best of luck in your venture.