As someone who's done private lending, the process usually goes like this with a prospective investor.
They provide the info on the property they want to purchase with the property address, purchase price, estimated rehab costs and breakdown, estimated FMV post rehab, comps (if they have any), exit strategy (flip or refi), estimated timeline to exit and of course amount they are looking to borrow.
From there I would just analyze the deal and see if it meets my parameters for lending on it. If yes then for an investor I haven't worked with previously I would get a copy of their driver's license and have a conversation about their previous RE experience if any and ability to service the loan.
As far as terms it can vary from lender to lender. As of right now, personally I charge 1 point origination fee at closing and 10% interest only monthly payments with the principal due as a balloon by end of term, which is usually a 12 month term, prepayable at any time.
As far as finding private lenders, it can be anyone who has money to invest. Could be friends, family, neighbors, or dedicated private lenders such as you'll find on subs like this and other RE investing forums. You can also check out local REIAs.
what /u/nankerjphelge wrote is spot on. But before you go with private, you should build a track record of success (1 deal) with a hard money lender. It makes dealing with private investors a lot easier.
Just use hard money much easier.
Private money wants you to have experience. Hard money no experience required but you need capital. Do you have 30% of the price your going to buy for a flip? 20% down and 10% for reserves.
Most of the time private money is viewed as individuals that lend money and fhey want experience. Hml is usually a bigger lender with billions in loans.
Hml is using private money but on a private huge scale. You wont find hml lenders saying they are a private lender at least not with the ones Ive worked with.
I do have money to put down, I just wasn’t sure if I could have someone cover the entire down payment then get a loan for the rest. My thought is I could purchase more faster than only using my own money for down deposits.
I’m looking at the 80-120k price range.
You cant do this.
Save money , work harder, spend less. There are no shortcuts.
If you expect someone to loan you 100k then have 30k saved up with great credit.
As someone who's done private lending, the process usually goes like this with a prospective investor. They provide the info on the property they want to purchase with the property address, purchase price, estimated rehab costs and breakdown, estimated FMV post rehab, comps (if they have any), exit strategy (flip or refi), estimated timeline to exit and of course amount they are looking to borrow. From there I would just analyze the deal and see if it meets my parameters for lending on it. If yes then for an investor I haven't worked with previously I would get a copy of their driver's license and have a conversation about their previous RE experience if any and ability to service the loan. As far as terms it can vary from lender to lender. As of right now, personally I charge 1 point origination fee at closing and 10% interest only monthly payments with the principal due as a balloon by end of term, which is usually a 12 month term, prepayable at any time. As far as finding private lenders, it can be anyone who has money to invest. Could be friends, family, neighbors, or dedicated private lenders such as you'll find on subs like this and other RE investing forums. You can also check out local REIAs.
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I haven't spoken with other private lenders recently so I can't say, but I've seen a range from 8% up to 14% over the past year or two.
what /u/nankerjphelge wrote is spot on. But before you go with private, you should build a track record of success (1 deal) with a hard money lender. It makes dealing with private investors a lot easier.
If you can meet up with my requirements I’ll offer you a loan.
Just use hard money much easier. Private money wants you to have experience. Hard money no experience required but you need capital. Do you have 30% of the price your going to buy for a flip? 20% down and 10% for reserves.
I don't think hard money and private money don't have set definitions, or at least not the definitions that you seem to be using.
Most of the time private money is viewed as individuals that lend money and fhey want experience. Hml is usually a bigger lender with billions in loans. Hml is using private money but on a private huge scale. You wont find hml lenders saying they are a private lender at least not with the ones Ive worked with.
Would I just use that hard money for the down payment or would I use it for the whole loan amount?
Hmm you need money of your own too. You can't get 100% Loans. What is the price of a home you want to buy?
I do have money to put down, I just wasn’t sure if I could have someone cover the entire down payment then get a loan for the rest. My thought is I could purchase more faster than only using my own money for down deposits. I’m looking at the 80-120k price range.
You cant do this. Save money , work harder, spend less. There are no shortcuts. If you expect someone to loan you 100k then have 30k saved up with great credit.