How to become a hard money lender

[Zee Anon]

Somebody in my network has been successful as a flipper. I have liquid capital I'd like to diversify away from stocks and into RE. We've already agreed on rates, and I'm going to ensure all the paperwork protects me just like it would any other lender (proper contracts, personal guarantee, etc)

The part I'm unsure of is what type of entity it should be under, just a regular LLC? And if the LLC exists purely to lend money, do I need some sort of license? If so, are these difficult to apply/get approved for? I'm located in Texas, flipper(s) will be out of state.

[Jerel Ehlert]

I work with HML/PMLs. If you have never lent money on REI assets, you probably should talk to a few who have, then talk to a lawyer who does this for HMLs in the jurisdiction where you plan to lend. It is a whole new world. The answers on licensing and entity selection are dependent on the state where you are doing business.

First thing, you gotta know the law, both state and federal, related to lending money on property in the state where the property is located.

As for asset protection or tax liability, don't take advice here.  Talk to a lawyer about asset protection and your CPA about tax liability.  Way to specific to your individual situation.