Tag Archive for: find peer to peer notes

Private Lending the Basics-Terms

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The Basics

There are some general terms every private note investor should understand before they being their journey. Here are some private lending the basics-terms:

Loan: A loan is the lending of money between one or more individuals or organizations to other individuals or organizations. The recipient incurs a debt and is usually liable to pay interest on that debt until it is repaid in full. “In full” means that they will pay the lender back the principal amount, or the amount of the loan, plus interest.

Valuation: The current worth of a property.

Mortgage/Deed of Trust: A legal document that secures a property and legally puts it in your borrower’s name (trustee) and your name (lender).

Title Company: A vital third party that ensures a property is legally transferred and your loan is well-protected.

Loan Amount: The total amount the borrower is seeking for their project. This might encompass the property purchase price, renovation costs, and/or closing fees.

Lien: When you secure a loan on a property, you will be given a lien position. This is essentially your place in line to be paid back. So, you always want to try and be in first lien position

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Payment Date: This is when the monthly/quarterly payments from the borrower are due.

Interest Rate: Your annual return on a loan. Your loan agreement should specify how often interest is to be paid (typically monthly).

Term: The length of the loan. Private notes can range from a month to many years. It just depends on your comfort level and what you’re looking for.

 

Learn more about returns and security from private notes in this blog addition.

Private Lending the Basics-Terms

 

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Ways to make your private notes a lot more secure. Part 2

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private notes done right

In our last post (Ways to make your private notes a lot more secure. Part 1) we discussed 5 ways to keep your private notes more secure.  In this post we are going to wrap up our conversation on this topic with the remainder of our top 10.

Private notes are a great way to earn above market interest rates and this is a few ways to keep them more secure and well protected.

6.  Check how committed your borrower is to their promises by asking them to put things in writing. That’s what a loan agreement is for—to spell out every term of the loan.  You will find a lot gets promised and don’t try to commit it to memory.

7.  Walk away if a borrower offers outrageous rates. If it’s over market rates, it’s probably a scam. Good borrowers don’t want to pay inflated rates. In fact, they want to pay and negotiate the lowest rate they can get.

8.  Always escrow funds for fix ups. That means you hold the renovation funds back at closing and release them later, as work is completed on the property. This will ensure the property value is reached by all the worked being completed as agreed.

9.  Ask for a borrower’s “story.” Learn about the good, the bad, and the ugly. This will build trust and prove if a borrower is trustworthy. If their story changes each time you talk to them, walk away. Don’t be talked into a bad loan relationship. Get all of your agreements in writing and fact check as much as you can.

10.  When someone needs to close a deal SUPER-fast (in hours or a day or two), run, don’t walk. This “emergency” to fund NOW will likely become a pattern and those loans will become a headache for you for years to come.  The borrowers will also likely want to skip steps that protect your money…there are too many loans out there to take on this extra risk.

 

If you have any questions on how to keep your loans as secure as possible please reach out to us on the Contact Us form.

Secret to better returns

Have a great day.

 

 

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The Simple Private Loan Marketing System

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Private lending marketing system

Where to find more loans than you could ever fund, or ever want to.

 

The Simple Private Loan Marketing System

You’ll be surprised by how quickly people will start calling and asking you to lend them your money.

Truly, it’ll shock you.

Private Notes for Beginners

So, if you’re worried about being loan-less, don’t. You’ll have plenty to pick from.

It won’t be about finding people to talk to you. It’ll be about sifting through and figuring out the loans and deals that are good for you.

Start where the demand is and the loans can be secured…real estate investors.

Lets keep this simple and just the top five ways to find private notes.

  1. Join the meet-ups.  One or two posts will typically be all you need.
  2. Talk to local property wholesalers.  Quick Google search will help you locate them.
  3. Call other private money lenders.  They always have deals they can not fund.
  4. Check with you local small community bank.
  5. Post on places like Craigslist.com

Here is the secret…there are more people looking to borrow money than there are active lenders.  So be selective and only fund loans you feel are good solid investments.

Before you start lending have a plan for your money and what terms you are willing to offer.  Don’t go looking for private notes until you know your ideal loan and borrower.

If you have a question or need help finding good secured notes you can reach out to us and we would be glad to assist.  You can reach out to us through the contact us form located at the top of the page.

Be careful and read about the some of the big warnings before you start.

 

The Simple Private Loan Marketing System

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