@Jeremy D. I think you have a good idea. The first step is to decide how you need to "store" the money. If you may need immediate access to cash you don't want to lend. If you feel like you will need money at a slower pace consider lending.
This is a very high level suggestion and if you start down the path you will get into the details. You will need clients (borrowers), the proper legal forms and documents, and knowledge. The best way to find clients is to network at every opportunity. The best way to get both forms and knowledge is to work with an attorney. I am assuming you already have the additional knowledge about local property values.
To answer your specific questions.
I got started by telling friends and family of my new found strategy.
To vet potential clients I pay for a background check. I do not charge to do this but charge an additional point for a first time client. If they fail the background I eat the cost.
I only do first position loans. Details regarding how much of the purchase price I will finance depend on the deal. I will go as high as 100%.
Good luck. Feel free to contact if you have further questions.
