Healthcare professional turned real estate investor, I’m excited to share my latest experience in private money lending. Recently, I closed a $50,000 deal in Jackson, Georgia, that not only provided a solid return but also taught me valuable lessons about the world of real estate investing.
The Deal:
- $50,000 investment in a property in Jackson, GA
- 70% Loan-to-Value ratio (LTV)
- First lien position
- Monthly payments
- Partnership with experienced investors Alexis Morgan and Abraham Gray
Key Takeaways:
- Importance of Vetting Borrowers:
One of the most crucial lessons I’ve learned is the importance of thoroughly vetting borrowers. This includes checking their credit history, real estate experience, and communication skills. A good borrower can make all the difference in the success of a deal.
- Security Measures:
We implemented several security measures in this deal, including:
- First lien position
- Lender’s insurance
- Clear promissory note and security deed
- The Power of Partnerships:
Collaborating with experienced investors like Alexis Morgan and Abraham Gray not only brought this deal to my attention but also provided additional security and expertise.
- Lessons from Past Mistakes:
I shared some of my early mistakes in private money lending, including:
- Not doing proper due diligence on borrowers
- Lending based on After Repair Value (ARV) instead of as-is value
- Not using construction draws for rehab projects
- The Benefits of Monthly Payments:
Receiving monthly payments provides a steady cash flow and serves as an early warning system if anything goes wrong with the deal.
- Caution with Second Lien Positions:
While not impossible, second-lien positions require extra caution and thorough underwriting.
- The Importance of Clear Communication:
Good communication with borrowers and partners is crucial for successful deals and potential future collaborations.
Moving Forward:
As I continue my journey in real estate investing, I’m focusing on:
- Building a portfolio of properties
- Exploring co-living and shared housing opportunities in Texas
- Collaborating with other investors and wholesalers
Reach out if you want to learn more about private money lending or real estate investing. You can find me on Instagram @thejstone or check out my podcast “Let’s REI” on Spotify and YouTube.
Remember, in real estate investing, education and networking are key. Keep learning, stay connected with other investors, and don’t be afraid to take calculated risks. Happy investing!