Private Financing - How have you done it?

[Matt Doerr]

I'm looking for suggestions on private financing and want to hear how you've structured it!? Specifically for single and multi-family properties.

[Jerel Ehlert]

Private financing should not differ that much from traditional or HML financing. The advantage is that fees for doing the loan are less. Due diligence should be the same (appraisal and inspection, etc.). At minimum, a note and lien instrument. Record what gets recorded. Close at a title company. Use a local lawyer to draft docs who is familiar with this type of transaction.

I draft these in Texas.  Here, it is a promissory note, separate deed of trust with power of sale, and warranty deed conveying title from seller to buyer with vendor's lien in favor of lender.  Close at a title company.  Deed (title) and deed of trust (lien) get recorded.  Wet-ink note goes to lender.  Everyone gets copies of everything.

If you do anything less for your private lender than is required of you by HML, you are doing your "friend" a disservice.