How to Structure a Private Money Loan For Real Estate (Detailed Example)

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Private money is a fantastic way to fund your real estate investments without bank qualifying or hassles. But how do you actually structure the details of a private money loan? In this video, you'll learn the details of one common way to structure a private loan from long-time investors with decades of experience.
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TIMESTAMPS:
0:00 - Intro
1:02 - Types of Deal Structures
1:53 - Short-Term Loan (Fixed Interest) overview
7:20 - Example on single family house
11:56 - Tips & cautions
19:00 - Closing thoughts
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[@CoachChadCarson]

Here's a video on how to find private lenders! ► kzbin.info/www/bejne/roacoaF3oqp5aLs

[@yourvahomegirl3290]

Question: When there is a repair escrow involved, is it a requirement for an escrow agreement to be included in your closing documents? What happens when there isn't one and there was never any specifications as to how the money would be held or disbursed.

[@CoachChadCarson]

@@yourvahomegirl3290 ​ @Your VA HomeGirl! It's definitely preferred to have everything in writing. Most of the time there is a draw agreement that explains exactly what will need to be done and how much money will be released. It sounds like maybe you don't have that. In that case, try to sit down with the lender and put a list together the best you can so that you're on the same page. As a lender, you don't want to loan for more than the borrower has done.

[@kierstencastellano8685]

Thank you for the easy - to - understand lesson on what could be difficult to grasp. ❤️ your channel.

[@CoachChadCarson]

Happy to help! Thank you so much for the feedback. It means a lot.

[@michaellindo6331]

Great 👌 lessons

[@AncelJames]

Trying structure my first investment property loan and I’ve learn a-lot from this video. 🙏🏾

[@CoachChadCarson]

Glad it was helpful! Best of luck, AJ.

[@michaellindo6331]

Coach Carson u r an excellent teacher 👍🇯🇲🇯🇲🇯🇲🇯🇲

[@CoachChadCarson]

Thank you Michael for watching!

[@dustongladfelter1153]

Thanks!

[@CoachChadCarson]

Thank you Duston!!

[@MarkGouveia.]

Thank you!!

[@MarkGouveia.]

Very clear information

[@CoachChadCarson]

You're welcome!

[@taurusbunkley6107]

@coach Carson does this work with hard money also

[@dustongladfelter1153]

Is there a course or more videos on becoming a private lender? We have some money laying around and we want to put it to work but I just don't know the ins and outs of it all. This video was a GREAT start though.

[@CoachChadCarson]

Thanks Duston. We're opening a Creative Financing Course For Real Estate Investors on Monday 8/16/21. It would be a good place to start. www.coachcarson.com/creativefinancing-YT Dyches, who I'm teaching this class with, also has a hard money lending class that I've taken. It's very good. It's not on his website now but he'll announce it whenever it's available: assets101.com/events/

[@ankushratwani2903]

Hey Duston, I have used private lenders for some of my deals providing a great return, in addition to I private lend out of my self directed IRA, American IRA, (which Coach Carson endorses). I would be happy to talk to you about both. My email is [e-mail]

[@ankushratwani2903]

Chad great as always, going to get this course soon. A question I have is what happens if a borrower does not get to do the renovation (something happens before then) and the property never got to that ARV of what was planned? If the borrower defaults I'm assuming the lender can foreclose on the property and they only get back what the property is worth at that time, or they can take control and get the property up to that ARV? Most say to lend less than 70% LTV, which works off the ARV if the property finishes renovation, but that is not the case if it never gets to that point? In your example above the lender would be at 92% LTV if the borrower got hit by a bus on day 1 and nothing happened to the property after closing, or let's say half the renovation was done.

[@CoachChadCarson]

Good question, Ankush. This is why you do draw for remodel. You only give the money to the borrower when he/she has finished the next work. This way you as the lender can prevent getting too your loan to value too high. If they stop paying you before the draw is done, you can foreclose and finish it yourself. And I look forward to having you in the class!

[@ankushratwani2903]

@@CoachChadCarson Great thanks!

[@aprilluce5560]

@@CoachChadCarson If you do a draw from the lender after the work is compete, then does that mean you are paying for the work up front out of your own pocket?

[@Davion_savant]

Hello Coach , How can I as an investor pooling multiple funds for a single transaction, ensure that the lenders funds clear fast in the case that I get a deal under contract fast also?

[@JACKNGARI]

Is the paperwork necessary for structuring the loan( clauses, terms , note and mortgage) available on your course?

[@menajdakasza6143]

How about a structure for a long term loan? I saw that in the intro but It wasn’t discussed. Only short term

[@swaggboii101]

Also, can you expand upon why a lender would want a low loan to value?

[@CoachChadCarson]

A lender would want a low loan because in the worst-case scenario they may have to take the property back (like if I were to stop making payments and they had to foreclose). In that case, the lower their loan to value the less chance they have of losing money, because they could get paid off at the foreclosure sale or they could take the property back and resell it. Hope that helps.

[@swaggboii101]

Do you answer question live in your course?

[@CoachChadCarson]

Hey Zachary, yes I do answer questions in the course forum/comments section and in August and September we have two live office hours calls where we have live discussions over Zoom. Thanks for your interest!

[@djgainsbond]

👍🏾

[@CoachChadCarson]

🙏

[@robertmccully2792]

I see no videos discussing, that buying now during insane inflation and covid evection laws. A lot of people are going to lose everything.

[@CoachChadCarson]

real estate with leverage is as good of a hedge for inflation as you can get. Eviction laws are definitely a concern. But I'm not sure how much is real and how much is media hype. With hundreds of units I have had no major issues. I am in South Carolina, which is more landlord friendly, so that may be part of it. Other states will be more difficult for landlords. But overall this is not something to keep you from investing. In fact, it's a buying opportunity because some landlords may get frustrated and want to sell.

[@patriciakosta4592]

Thanks!

[@CoachChadCarson]

Thank you so much Patricia!