Private Lending, Driver's License, and a Fake ID

[Curt Bixel]

I have completed a cash out refinance of several of my rental properties as well as my personal residence, and now have what, for me at least, is a mountain of cash.  

I am looking into serving in the role of a private lender as well as other ways to invest this money in real estate.  (My experience is in buy and hold rental, mostly duplexes and quads.)

As I put myself out there, people interested in doing deals are coming out of the woodwork so fast it reminds me of Worthington High School back in the 1980's when I was the one of the first kids my age to get a driver's license and a fake ID, and could thus combine the services of transportation and beer acquisition.  

The sudden surge in popularity was really quite something.

In any case, I have finally found a possible partner that is exceptionally professional, exquisitely organized, has a well established business and thus a business reputation to protect, and seems to have a steady pipeline of deals.  Right now, this is the person I am most likely to choose as a borrower.

I am, however, quite a newcomer to this side of the business.  I have had them send me some documentation that would be signed by both parties in association with the loan, and I am looking for someone, likely and attorney, who can help me assure that this is all set up exactly as it should be, that I am receiving a fair rate for my money, and I am appropriately protected.  

(My gut tells me this company is so nice and professional that there is nothing to worry about, but I am a newb, not an idiot, so these steps will be taken.)

I have attempted to begin educating myself by reading books on private lending, etc, but I would be interested in connecting with someone, again, likely an attorney, who can help me avoid problems and walk me through the process for the first time.  

[Ned Carey]

@Curt Bixel Wayne nailed it as he usually does. But I will fill in some detail.

The fact that this company appears professional, from the outside looking in is almost meaningless. I know of many investors that put on a good show but are otherwise struggling in some way. It is worse if someone is deliberately trying to take advantage of you. They can dummy up all kinds of documents showing how great they are.

You should ask yourself if this guy is so experienced why doesn't he already have relationships with private lenders and why does he need your money?

The borrower does not send you documentation for the loan. An attorney that works for you specifically draws up the legal documents.  You Need a note, A mortgage or deed of trust, a personal guarantee and a confessed judgement if you can get it and it is legal in your state.

It is not an attorney's job to decide if you are getting a fair rate, however the attorney you choose should regularly do documents for private real estate loans and be familiar with typical rates in your area.

The attorney can also help with vetting the borrower. He or she can check for judgments, other mortgages that he has and any court cases or foreclosures against him.

You Wrote

No you use an attorney every time to write up and record the documents. They buyer pays these costs.

Good luck - Ned