Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Private Lending & Conventional Mortgage Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 6 years ago on . Most recent reply

User Stats

860
Posts
323
Votes
Mayer M.
  • Investor
  • Cherry Hill, NJ
323
Votes |
860
Posts

Being a hard money lender. Should I do it? Advice?

Mayer M.
  • Investor
  • Cherry Hill, NJ
Posted

Hey All,

I have been approached to act as a hard money lender on a small property (less than $100k all-in) close to where I live. I’m intrigued and am considering doing it, but have never done this before. I have experience flipping, but not lending.

I like this because I can easily check up on the property, have knowledge of rehab costs, etc.

Can anyone provide any insight on this? If I do it I certainly want to make sure I do it correctly and if it works out well I’m sure I’d want to continue doing it.

Thanks,

Mayer

Most Popular Reply

User Stats

24
Posts
9
Votes
Rob Jafek
  • Mesa, AZ
9
Votes |
24
Posts
Rob Jafek
  • Mesa, AZ
Replied

There are some good suggestions here already, and I will add one more, given the circumstances, which is that you have experience, and they don't.  You will probably be tempted to share advice, but you need to resist the urge.  It's a bit arcane, but by offering advice, you may be opening yourself up to a situation where it can be construed that you were actually  not just a lender, but rather a partner.  If that is the case, then you are liable for building errors (10ish year tail), code violations, civil issues, etc, basically you are a 'partner' in anything stupid they did, so you are liable, and potentially for 100% of the error (you'll be rolling the dice on the joint and several thing).  Therefore, my advice is: offer no advice.  

Read more here: 

https://geracilawfirm.com/lender-beware-the-risks-...

and here: 

https://www.cnbc.com/amp/2017/03/09/buyer-beware-t...  

Note the lender getting wrapped in/sued. 

And (especially) here:

http://apps.americanbar.org/abastore/products/book...

@Yonah Weiss is absolutely right about the value of a lawyer.  And the concerns about NJ jurisdiction, and the #s here allowing walking away are valid as well (we don't do 100% financing for that reason).  

Although it looks like their site may be down at the moment.  

This still may be a good, or even great deal.  Just go in with your eyes wide open, hope for the best and plan for the worst.  We wish you well!   

Loading replies...