All Forum Posts by: Mitch Messer

Thank you for your response!

I hear you and I fully accept it.

I'm just having trouble seeing how both lenders on one loan is fine and yet a first-and second structure is a conflict of interest.

What's the fundamental principle I am missing here?

I'm sincerely asking.

Thank you for taking time to respond! 

Yes, this was my initial reaction to the co-loan structure as well, but it appears doing so is actually the SAFEST solution.

Who knew? (Well, I guess @Dmitriy Fomichenko, @Brett Synicky and @Jay Hinrichs did, technically!)  

We've got an interesting private lending situation:

- Husband and wife, each with their own checkbook SDIRAs, want to lend on the same real estate deal.

- Borrower needs $100K.

- Each spouse can lend $50K.

First question: Is this even allowed?

Second question: If allowed, what's the best structure? A first and a second lien? A single shared co-loan? Something else?

I'm asking because the guidance we're getting from their IRA custodian sounds questionable. We'd like a second opinion.

Has anyone here done something like this?

Any advice and/or insight would be greatly appreciated!

Thanks in advance!

This kinda proves my point. The folks I'm calling private lenders don't advertise. They don't have fine print. They don't need disclaimers.

Anyone who has all of that probably isn't a private individual lending their own money.

And, if your lenders did take longer than two weeks to close, what exactly were they doing for all that time?

What single individual lender needs more than two weeks for "due diligence?" (Assuming they're not flying out to the property to inspect it.)

You look at the deal. Check out the scope of work. Certainly, vet the borrower. Verify the comps and the ARV. Review the photos. Check references.

Even if you have to pull credit, this all won't take more than a few days, at most.

Meanwhile, is the title clean? Are the loan documents accurate and complete? Are we on the insurance policy as a lender?

Then, let's close!

The big national hard-money lenders aren't slower because they are so much more thorough and careful than a private individual.

They're slower because they've got a HUGE inefficient organization with hundreds (thousands?) of employees requiring tons of coordination and cooperation.

And, that's totally fine!

But, these Big Guys are NOT doing private lending.

Oh, but I think it matters a LOT!

Transaction speed, fee transparency, and direct relationship are the defining hallmarks of working with a private lender.

And, you won't be getting any of that from a bank or a hard-money lending operation!

That's fine: I'm not saying private money is inherently better.

I'm just asserting that private money is different in many important ways!

It's not Coke vs Pepsi: It's Mad Dog 20/20 vs. Dom Pérignon Champagne! 😁

@Erik Estrada I don't disagree that there are lenders who pool money to work with investors, particularly for larger deals.

But, that's not the kind of arrangement that most real estate operators I talk to are seeking.

A small-time investor, looking to fund a deal for under $250K, isn't going to be very interesting to these types of lenders, anyway.

Lumping everyone together as a "private lender" is unnecessary and confusing.

If it's a private credit fund, let's call it that. But that's not private lending.

If it's a syndicated loan, let's call it that. But that's also not private lending.

If it's a major national hard-money lending operation, that's not private lending!

When one single private individual is lending their own money to an investor, I'm just proposing we call that person a private lender.

And, that person doesn't need 30 days to fund a closing.

There's been some confusion about who qualifies as a private lender versus a hard money lender.

Let me make this SUPER easy.

1️⃣ Private lenders have people names, like Mary, Robert, Maxwell, or Sara.

There's only ONE decision-maker, and the person who talks to you is the SAME person who decides whether to lend you the money.

If your loan contact ever uses the phrase "underwriting committee" you're NOT dealing with a private lender.

2️⃣ Private lenders don't need a month to fund your deal. Once they say "Yes" they just need clean title and prepared loan documents.

If you're contact can't close in two weeks or less, they're NOT a private lender. (Assuming we're not talking million-dollar loans.)

3️⃣ After you close, if you never hear from your contact again, and someone else takes over, you are NOT working with a private lender.

Private lenders stay personally involved until you pay them back their money.

Because ... it's THEIR money!

Now, to be fair, I often hear GREAT things about operations like Lima One, Kiavi, and many others.

But, these are NOT private lenders. They are nationwide hard money lending operations.

#NotThatTheresAnythingWrongWithThat

#ButThereIsADifference

#TwoWeekRule

Looking for strong personal referrals for an experienced Texas foreclosure attorney.

We've got a couple of Beaumont investment properties with 1st-position trust deeds that are in default. Should be pretty straightforward, hopefully.

Please reply or send via DM or email me. My contact info is in my BP profile.

Thanks in advance!

Hey Francis, we've funded a bunch of deals in Harrisburg, so I may be able to help you there.

After all, we electrical engineers should look out for each other!

Finding a cash buyer is only easy in wholesaling if the deal makes good financial sense.

If you've put this "deal" in front of serious, active buyers, and none of them have jumped on it, then you've got a dud.

Is this a fix-and-flip, a buy-and-hold, or something else?

How did you determine that this would make your cash buyer money? How much would it make them?