All Forum Posts by: Frank Y.

Hi, Nick @Nick Marshall: Here is what I see after reading your post. 1) You cannot put the private lender (or investor) in 1st lien, because you will need more money from regular bank, which will require to be 1st lien holder; 2) If the private lender is not on the lien, and not part of the LLC, who would give you upfront money without securing it? (Most, if not all, private lenders would not do that). To make everybody happy, I would partner with the private lender in the LLC, treat the private lender as bank, IF he can fund the whole project without going to another bank. Good luck.

@Ellie Narie This should be a very easy process. Have a lawyer draft mortgage, promissory note, and guarantee agreement (if borrower is your LLC and you will be guarantor). Your friend/relative will be 1st position lien holder. You guys work out a payment schedule and rate. At the end of 2 or 3 years when you are eligible for regular mortgage, apply for mortgage and pay off your friend/relative. Good luck.

Go to your local real estate investing meet ups groups, ask your realtors, ask other investors and etc. Good luck.

Private lenders rarely require PMI, though they ask title insurance up to total loan amount as well as Home owners insurance. Even if a private lender ask PMI, $2k is too high and should not be paid up front. Be aware if scam.

Totally agree with Brad Smith , why does the name matter? Make sure you have the fund available when you need it @ favorite terms.

3% is way to low for private lending. Even regular banks charge higher than that. Don’t pay the $500 upfront fee. Clearly it’s scam.

For me that is for sure a scam. Don’t pay upfront money!!!

Joseph DiNardi-Mack I am a private money lender in PA and I was in the same situation as you are in now. I have a full time job and I started to flip couple years ago. But now it’s more and more difficult to buy good deals so I started private money lending 2 years ago. For me, two due diligence areas need to done right - legal and financial. For legal, you need an attorney to draft all your loan documents and make sure if a license needed in your state for private lender (PA does not need as long as not to owner occupied. There are only 12 states need a license). For financial DD, you have done flips, so should know how the number works. Good luck!

@Andrew Michael @Jeff S. Andrew and Jeff: thank you so much for the suggestions. Yes, 15 day grace period is too long. That was one of our earlier deals and now all our deals are 5 days. She is an experienced investor with many properties (never verified), but she  is not well organized at all. This is not a flip property, it is a fix and hold for rental. I will talk to her about the options you mentioned. Again, thanks. 

David C. Hi, David, thank you for your input. Yes, the loan document has the clauses says that if the borrower fails to pay the insurance, I will pay the premium for the borrower and bill the borrower.