Borrowing money from friends,family, and other

[Rich Vogel]

Hi All,

I know there is a lot of legality around borrowing money from people and soliciting business for borrowing.  I have some family and friends that are interested in holding notes on my rental properties.  What is the process that I need to go through with them to make sure everyone is protected.  Also what if some one who is not in my inner circle wants to invest in a note on my property? Do they have to be accredited? I want to make sure that I am doing this the right way.

Thanks for the help,

Rich Vogel

[Andrew Postell]

@Michael Ganovski in general there are 2 main methods to help people feel comfortable with lending money for real estate:

1. Drafting a Note - a note is the document that places in writing the terms and conditions to your loan.  You can have this signed by all parties and even notarize it too.
2. Securing a Lien - A lien is the documented loan placed on the property.  So if the property were to ever get another loan, or sold, that lien holder would be paid FIRST.  If the worst, absolute worst thing to happen....which won't happen...but if you pass away...they are still protected because their loan is documented on the deed of the property and filed at the county courthouse.

And these are the main 2 areas that people use when lending/borrowing money from each other.  Hope this helps!