The Contractor was recommended by one of my borrowers. 

I borrow from private lenders all the time and its my primary source of capital for the rentals to do.

If the intent is to flip it, there are two ways people buy houses 1. with borrowed money 2. with their own cash.

Your lender will probably require a certain amount of cash reserves so it would be wise also to look into lenders who might lend to you -- and get to know their requirements.Ultimately your expansion ability is going to hinge on your ability to borrow money, which to a part relies on how much down payment you can get.Just my 2 cents.

He borrowed the money, they lent it in good faith, the court will see to it that they are made whole.

If you havent done so, find a lender competent in self-employed borrowers. 

Also a significant number of people either sold on subject 2 with their low rates or did seller financing with poor underwriting on the borrower.

If you're looking to get funding, FTF is easy to work with on the borrowing side as well (I haven't been through the borrowing process personally, but I know other investors who have).Happy to answer any specific questions you might have, and Matt and his team are always happy to answer questions as well.

To succeed in hard money lending, know your local market well, value properties accurately, and carefully evaluate borrowers.

There's also a ton of investors who approach banks and believe they can borrow money without recourse (no personal guarantee) merely because the property is titled to an LLC and then falsely claim "banks do not lend to LLC's".