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Updated over 7 years ago on . Most recent reply

User Stats

378
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153
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Matthew Rembish
  • Flipper/Rehabber
  • Toms River, NJ
153
Votes |
378
Posts

Lending Money to Brokers

Matthew Rembish
  • Flipper/Rehabber
  • Toms River, NJ
Posted

So I have been recently talking with my real estate broker and had mentioned that I would be willing to lend to other investors at a 10% interest rate while I was out of the game for a little while and studying for an engineering licensing exam; I wanted to keep my money working while I didn't have the time to do any flips or rentals myself. A few weeks went by and he approached me about lending money to himself for a rehab flip project (which he has flipped many houses in the past). The money would basically all be going towards the construction costs so I would not be financing the actual purchase. When I spoke with an attorney, he told me that he should get mortgage and title insurance, it should be recorded and a contract should be drawn up, and it was all very expensive compared to what he intended to pay me back in the long run (6 month term). He mentioned that he could get a lot of this done without my attorney and everything would still be handled and drawn up correctly and legally by his title agent. I trust him a lot as I have done a lot of work with him over the years and have even borrowed a little bit of money from him for a rehab project I worked on a few years back. Does this sound okay or would you still go the attorney route? Looking for any advice or insight.

Thanks!

Most Popular Reply

User Stats

862
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438
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Darren Eady
  • Rental Property Investor
  • Lindon, UT
438
Votes |
862
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Darren Eady
  • Rental Property Investor
  • Lindon, UT
Replied

@Matthew Rembish

You'll want your own representation IF you go through with this.  A realtor has many contacts with title and even attorneys that can structure the deal to protect themselves and not you.  Sometimes you can find a title office that has a RE attorney on staff that can look over the docs. for you and help you adjust the deal.  

All that said, this is a one off deal for you and I would much rather you purchase a performing mortgage note from a HML that does this all the time. I'd hate to see you learn the hard way!

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