Hi, I did private lending to one of my friend , he mortgaged his investment property as first lien with me.agreement was that he will pay interest monthly, and he was almost regular on that.in July that property got deadly fire, in August beginning he paid my interest for July and didn't mention anything about fire.today, he called me and told that he wants of pay off(but he didn't pay last month's interest).I said OK start processing for payoff, but pay me last month's interest asap, then he told me that house went on fire and he is hoping to get insurance money and then he will pay, he has no money to pay interest .Now, my concern is should I wait and watch or I need to take some pre-action to make sure that I get insurance money since I am on first lien.

Don't get me wrong, I've closed a few of these (in these cases the appraisal report came back only a bit different from what the agent/buyer described), and had a bunch die after the appraisal came back (when the report is VASTLY different from what the agents/buyer said to me, which is the norm), but due to systemic unreliability of information my position is that the price of a definitive yes/no is an FHA appraisal fee.Make sure you're working with a lender that isn't artificially restrictive, get it under contract, and get an appraisal going.

I see your point and you are correct, In his position I would love to not be liable for the actions of my dog.

He offered the land to me at cost, along with his counsel.I also have a connection to a local contractor with a good reputation, a positive history of partnering with investors, and knowledge of the area.I'm cautiously optimistic, but I realize that I'm ignorant.

I recently started requiring it my leases, but have not taken action against a tenant who has not gotten yet it.

If the mortgage foreclosure Just happened, there may be a redemption period (which you could be in a position to have the title company negotiate for you); since the bank sold to a developer, the title company would need to contact them.Another piece of the puzzle is the deed; who signed the deed to you, when, and what kind of deed?

Here is a list of items that a hard money lender would like to see:Project Financial Analysis - Breakdown of your financial analysis for the project showing your ARV, Repair Costs, Buying Costs, Holding Costs, Selling Costs, Financing Costs & Projected ProfitRepair Estimate - Summary of Repairs broken down by CategoryProject Scope of Work - Detailed breakdown of all Estimated RepairsComparable Sales Data - Comparable sales analysis of at least 3 similar, recently sold compsProperty Photos - Photos of the existing property conditionYour Resume - Your resume of past experiences, & action plan for the projectI have uploaded a sample Investment Presentation in my fileplace as an example:https://www.biggerpockets.com/files/user/drobertson/file/sample-rehab-investment-presentation-for-lender

I'm planning to buy rental properties and hold them for positive cash flow.

It has some distinct positives, and some major negatives.

As long as you have positive cashflow, your tenant is buying the property for you.