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Updated over 1 year ago on . Most recent reply

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Gil NA
  • Rental Property Investor
  • Los Angeles, CA
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Private Lending Advice

Gil NA
  • Rental Property Investor
  • Los Angeles, CA
Posted

Hello, I came across an opportunity to invest/ private lend on a fix and flip. The annual return rate is good and time-frame works for me.

My questions are;

1) what are the type of documents I should expect to receive during the contractual process? Promissory note, grant deed etc.

2) should I setup an LLC for tax purposes or other benefits of LLC vs personal?

Thanks in advance.

Most Popular Reply

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Jerel Ehlert
  • Attorney
  • Austin, TX
758
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Jerel Ehlert
  • Attorney
  • Austin, TX
Replied

Talk to a LAWYER who drafts docs for these types of transactions, licensed in the state where the property is located.

Most private lenders I've worked with forego a loan agreement, but could be useful when there is a lot of complexity.  Most only use either a personal guarantee OR a business purpose affidavit, but not both. If they are borrowing in their personal name, it already is a guarantee for that person.  If the borrower is an entity, no need for a business purpose affidavit.  In Texas, we can put a vendor's lien in the warranty deed.

Again, check with a lawyer in the state where the property is located, because that is the law that controls.

  • Jerel Ehlert
  • Loading replies...