Getting money from private lenders is surprisingly easy, once you understand how to find and talk to them, but there’s another very important aspect of private money that touches on legal issues that you need to know about. Let’s go over a few of the basics of how to handle private money right, once you get it:
1. Touching the Money.
2. Co-mingling funds.
3. When do the payments start and end?
1. Touching the Money
Sometimes when people hear the kind of interest I pay, they get so excited about loaning me money that they want to hand me a big check right on the spot. This is not the correct or legal way to handle the situation.
I know that some of you are so eager to launch this new phase of growing your business that you really want to grab that first check, but don’t do it.
Here is why: you have promised the lender that the money is secured by real estate. So, legally, you shouldn’t be in possession of unsecured money. Until there’s a deed ready to secure it against, don’t hold it, don’t put it in your bank account—don’t touch it at all. Read More...