What questions to ask a prospective private money lender?

[Brook Rieman]

My husband and I are looking to flip and/or BRRRR in Bloomington, Indiana and surrounding areas. We are exploring using private money and have had a few people contact me through BP but how do I know they are legit? I would ask for references from past deals but what other questions should I be asking and things I should be looking for? Any tips on the process of partnering with a private money lender, terms, etc? We are new to all of this and any help would be appreciated.

[Aaron Poling]

I always like to start with finding out what their motivation is, what they are trying to accomplish and then you can figure out how to structure the deal to accomplish their goals. In my opinion this is always better than just throwing out what you assume would be appealing to them. 

Other questions to ask

How long of a term would they like to lend on?

What interest rate do they charge?

Do they charge points? (this is more likely with hard money lenders, but some private money lenders will as well)

These are just a few. 

Hope this helps! Aaron