My First Hard Money Loan / Private Loan - Loveland, OH

[Grant Smith]

Investment Info:

Single-family residence hard money loan investment in Syracuse.

Purchase price: $200,000
Cash invested: $65,000
Sale price: $340,000

This was my first private/hard money loan. The property was a fix-and-flip in an amazing community in Loveland, OH. All parties profited significantly and overcame a few unexpected hurdles along the way.

What made you interested in investing in this type of deal?

I wanted to gain more knowledge in residential real estate because I wanted to purchase residential real estate for myself. After not finding any deals, I was approached by a local agent who was working with an investor doing 20+ fix and flips per year. An hour-long meeting turned into a 3-hour meeting as we completely hit it off. I've done 20+ loans with that investor since.

How did you find this deal and how did you negotiate it?

I was approached by an investor through a referral and we negotiated in the investor's office. It was my first loan, so I ended up giving favorable terms, but it got me started. I now have a business dedicated to serving the real estate investment industry because I took the first step.

How did you finance this deal?

I used a personal line of credit that I had at my bank to finance the deal. My interest rate spread was 10.75%.

How did you add value to the deal?

I brought the money. I didn't have a lot to add other than that, but I had a lot to learn.

What was the outcome?

Both parties profited significantly and it led to a chain of 20+ loans thereafter.

Lessons learned? Challenges?

How to underwrite a single-family residential property.
How to write a promissory note.
How to write a mortgage.
How to write a payoff statement.
How to write a satisfaction of mortgage.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

A real estate agent helped me underwrite the deal. His name is Eric Gross and I would recommend him to anyone in Cincinnati, OH.