All Forum Posts by: Julian Buick

@Phillip Cailey welcome to BP. I assume you mean acquisitions manager. Otherwise that would be quite disturbing.... Good to have more local note investors on the site. 

Keywords: Self Directed IRA and private lending notes

If I make a loan through my SDIRA to an LLC for a fix and flip, can I also make a loan to the same LLC using my private funds? Or is that not allowed? The LLC would manage the whole rehab. I would have no involvement whatsoever apart from providing funding. The loans would be paid back with interest at closing. There would be no equity position received.

@Kathy Stewart does that mean you work with a HML company to broker the loan? Or are you lending directly to the investor?

Kingsgate has always been the armpit of Kirkland. However, it is really close to Totem Lake Mall which is supposedly getting a huge remodel very soon. Apparently it is also getting a Whole Foods. Can't do any harm for the house prices. 

@Maya S. You should talk to @Ryland Taniguchi   He may be able to help you do something with your incredible deal. At the very least he will be able to tell you how incredible it really is. 

@Ashley Wolfe your profit comes out of the remaining 35% (using the 65% rule). Net profit = 35% - holding costs - sales costs. Divide that by 2 and that is what you and the contractor will each get. 

Thanks for the advice @Jon Holdman I will take it into serious consideration. I'm just starting out investing so I know I have a lot to learn. I do not have credit reports, social security numbers or 1003 credit applications on the people I have invested with. I know who they are, I know where they live, I know their friends and associates, I know how to find them. Could they skip town, never to be seen again, of course. But if they ever want to get involved in real estate in this area again the word will get around. I guess I need to keep my fingers crossed that these first few deals work out and then get an attorney to create my own trust deeds and promissory notes with personal guarantees included. I like your suggestion of not putting more than 10% of my nest egg with any one person. With only 6 deals that's hard to do but going forward I will try to split it up that way. 

The OP is about becoming a hard money lender, which I suppose is almost always in first position so I understand where the recommendation to always lend in 1st position comes from. I'm just a private lender and it seems there are lots of people willing to lend in 2nd position. They would all be subject the same concerns that you laid out earlier. Your comment "with any loan your FIRST consideration should be getting paid back if something goes wrong", would that be accomplished by getting a personal guarantee? If not, how would a 2nd position lender consider getting paid back? Or is it like I said, a numbers game?

@Jon Holdman so it's a numbers game. I agree with everything that you said and thanks for the response. I currently have 6 deals in work, 2 of them are joint ventures and 4 are 2nd position loans. If one goes south, hopefully the other 5 will make up for it or at least offset it. I'm not assuming nothing will go wrong but I am assuming that nothing will go that badly wrong that the rehabbers will walk away from their business that they have been building for many years and leave me with nothing. I may be naive but I think that they would pull out all the stops to pay me back so as not to tarnish their reputation. I know there are a lot of shady characters out there but I did a pretty thorough background search on all the people I am working with. So, do you think I should be getting a personal guarantee for these loans? If so, how do you do that? 

@Jon Holdman and @Mark Nolan I'm curious why both of you guys are strongly recommending to only lend in first position. I've been lending in 2nd position to local rehabbers in my area that I trust and have a proven track record and it seems to be working out well, at least so far. I realize that lending in 2nd isn't as secure as lending in first but as long as the people you are lending to are reputable and competent is there some major drawback to it?