All Forum Posts by: James Lapp

I know the two individuals very well as they are former colleagues. One is now a real estate agent and the other an accountant. They've been successful in their careers but this is their first flip. They did buy and renovate a house but instead of flipping, they refinance it at a big profit and rented it out.

I could afford a 40k loss but it would be a big hit (about 1/2 of my total cash in the bank). 

I would structure the agreeing so that the interest rate would go to 1.5x the original after 12 months and 2x the original after 24 months, with an option to file a judgement lein in the collateral after 18 months.

Is there a way you recommend I find a local attorney (besides Google)? If I engage an attorney, I would try to build his fees into the cost of the loan, probably as points on the backend (after flip).

One of my worries is that with the added cost of the attorney and with the return I require to satisfy my risk appetite, the rate I can offer them would be uncompetitive (one of them who has a steady income, good DTI and prime credit score can get fairly competitive (6-8%) rates on an personal unsecured loan). Although I'm eager to invest, not sure I am comfortable risking that much for 6/8% return.

Hello,

I am a potential hard money lender considering loaning to two individuals who are flipping a house.

Individual #1: Taking out traditional mortgage with 10% down to purchase property

Individual #2: Managing restoration and sale, taking share of profits

They need money for the restoration budget, estimated at $40K. Timeline is 4 months for restoration and 2 months to sell. I am considering lending them this amount but would like to secure the loan with collateral.

1. Should I register a lien on the house? The bank will have title, so this would essentially be a second mortgage on Individual #1's 10% equity in the home.

2. Can I register a lein on another piece of property (e.g. a car)?

3. This is an out-of-state deal (for me). What kind of person should I talk to get a legal document drawn, notarized, and a lien registered?

Most of the information I found online for private money lending is related to lending the full amount for the house/renovation. I am only lending for the renovation. Any advice or links to reading materials would be greatly appreciated.