An Alternative Way to Deal with Private Lenders

As State lending laws have become more Draconian (Nevada), private individuals with deep pockets have been removed from direct lending and entrepreneurial flippers are being forced to look at other alternatives. As a flipper who moves quickly, sources of funding where you could literally make a phone call are running dry simply because of Compliance.

So here is another way to deal with your private lender. There is no Note, No Deed of Trust and yet they are still protected by owning the secured asset. In fact in many instances this format is more streamlined, since in the case of default, there is not foreclosure process, notice, collection action or anything.

Essentially is an overview;

1. LLC is formed with both parties (flipper and funder) named on the LLC
2. Funder funds the purchase and rehab whatever the parties agree upon
3. Flipper does their magic
4. At the Sale of the Project Funder is paid all contributions made, a preferred rate of return and a portion of the Net Proceeds
5. Funder and Flipper have JV agreement which spells out the specifics of each deal or Master Operating Agreement.

This is a very simple clean and straightforward process. Where the funder comes up with the cash etc is immaterial.