Posted by dealmaker on July 10, 2007 at 13:32:32:
Since he’s overpaying based on the little info you provided I would not be interested in lending on it. It’s barely break-even if it needs NO REPAIRS.
dealmaker
How to give out Loans back by Deeds??? - Posted by Peter
Posted by Peter on July 10, 2007 at 10:23:22:
Hey guys, I have a question. I know someone who found a pretty good deal on a fixer upper property, but does not have the funds to fix up the house. My question is:
Stats:
House Market Value: $300k
Client purchase for: $200k
Funds needed from me: $30K
If I have him the loan, how structure the loan that if he loses the property or doesn’t pay me back, I can take it over and bill him for what he owns me?
How much interest should I charge him? Someone told me 20% per year.
Is this similar to an auto title loan? Not sure how that works either.
Re: How to give out Loans back by Deeds??? - Posted by lukeNC
Posted by lukeNC on July 10, 2007 at 15:56:33:
If I loan money on a real estate deal its a very high rate. I start at 18% interest at the least.
Yep you could make sure you have note that is personally guaranteed by this guy. Thats where I’d get an attorney involved.
Call up your RE knowledgable attorney, tell him that you want to loan out some money, give him the details and have him set everything up.
A Mortgage or Deed of Trust… - Posted by JT-IN
Posted by JT-IN on July 10, 2007 at 12:32:45:
Depending upon which state you are located, the terminology is interchangeable. Either way, it is a secured interest in a property in exchange for lending the owner money.
Now here is the tough part… You really shouldn’t be lending any money on RE, just based on the your question. I realize that you are trying to learn what you should know by asking the question… and you will get good info here, but you simply do not know enough about it, or will learn learn enough about it, to be entering the fray of the lending game.
Your question was… I can just take over the property and bill him for what he owes me…? Darn, if only it were that easy. But it is NOT. The lending game can be a complicated business, you must know lots about credit, subordination, many federal fair credit laws, etc, etc… and not knowing can cost you BIG.
Unless the amount of funds you are about to lender to this person is pocket change to you, and the loss of which would have NO impact on the rest of your life, (physically or emotionally), then you need to pass on it until you learn more…
The mere suggestion of charging 20% interest in some venues could get the mtg or dot mitigated (erased or uncollectable). See how easy it is to get hammered in the lending game…? Do a google search on the term “Usary”, and when you fully digest that term and potential snafu, come on back for some info. Eventually, you will reach the point where you are ready to do the lending deal you have discuss.
JT-IN