Ways to make your private notes a lot more secure. Part 1
Putting money to work in private notes is a savvy, safe way to invest your money. But like all investments, there are there are a few ways to make them even more secure. Please understand that the fees and costs of these items should always be picked up by the lender. These costs are a lot less than they would pay with a traditional lender.
Here are 1-5 of our top 10:
- Always insist upon using a third party to create your closing documents. Have your attorney complete or review all the documents (this should be covered by the borrower and not you). Do NOT let the borrower write them for you.
- Hire an appraiser or local realtor to valuate each property to so you know the real current market value. Do put all your trust in the valuation provided by the borrower. It doesn’t mean they’re trying to lie. They simply might not know the value of the property. The loan to value is key to keeping your money secured.
- Require each loan be closed, insured, and recorded by a title company and or attorneys office. If a borrower claims closing/recording through title is a waste of time or money, they are not the type of borrower to receive your money!
- Always pay for title insurance and request first lien position. First lien position will ensure you get paid back first, before anyone else. If you just order title and don’t request to be in 1st lien position you may end up in a jr lien position.
- Always verify wire instructions verbally with your title company to avoid fraudulent activity. Do this each time you send or receive a wire. Wire fraud has increased and always take the time to protect your money.
Next up Ways to make your private notes a lot more secure. Part 2. 6-10
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