This is especially true for private money loans, where lenders may want a clear picture of your assets, liabilities, and cash flow.Your credit report and tax returns are crucial, but a well-organized financial statement can strengthen your loan application, showing lenders that you have a clear handle on your financial situation.

@Joyce A DebrahDoYou want to be passive or active?

Complex Contracts: It’s crucial to have clear agreements in place to avoid misunderstandings.Watch out for vague contracts, high option fees that seem unjustified, and properties that aren’t well-maintained during the rental period.

It is possible that you could take the deduction for your rental as a separate investment activity. 

Understanding their exit strategy—how they plan to pay back the loan—is crucial for minimizing risk.Don’t overlook the property itself.

Based on what I have heard/read thus far, it seems like I don't need a formal legal structure such as LLC for running this is as an active business (but I may set up an LLC for asset protection, which is allowed by my mortgage lender).

Sometimes a pestering police presence can be a deterrent.If the suspicious individuals are engaged in criminal activity, calling the police while it's happening helps too.

I used to be active on here (BiggerPockets) around 2009, and wow, how it has grown!

We’re actively participating in auctions, but unfortunately, we missed out on our last bid by one bid higher.

It’s a bit complex, so working with a 1031 exchange expert and a tax advisor is crucial to make sure everything is done correctly.