Beginner Private Lending Tips

[Cara Kennedy]

Hey folks,

As the title indicates I'm a beginner as far as private lending goes. I had one deal that fell through when I didn't know enough and I'd like to avoid that trip up when the opportunity arises. I'm looking for general and conservative advice as I look for ways to have my money work while I seek my first physical deal. My apologies if these are repeat questions...I'm working from my phone and browsing the forum isn't working for me today.

My main questions are:

1) what is a typical private lending percentage? Amortization schedule? Points up front (or is that reserved for hard money)?

2) what serves as collateral? First lien on the home? Anything else?

3) what do you look for for proof of backing from the person and/or project? Do you prefer to have worked with the person already? Standard market research on the property and LTV ratio?

Thanks for your time!

[Chris Mason]

An actual "private lender" is your friend or cousin or coworker. You and your cousin can work out whatever you like. That answers questions 1-3.

Please note that the most common HML marketing ploy is to claim they are a "private lender." Unless the person putting that ad up is your cousin, they aren't a private lender...