Quote from: ScryptAsic on November 30, 2014, 08:29:15 PM

Quote from: CryptoREI on November 30, 2014, 07:13:14 PM

Wow I kinda laid to rest bitcoin interest in such deals,

Not a scam at all, your money is protected. I will explain, if you have questions please ask I love to talk real estate

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That is correct the lender will get the money back + interest. If that is how the deal is structured.
The second choice is whats called equity partners, this is when the lender and the flipper splits the profit 50/50 this is usually how it works for the first time. It is a way you prove to your money you can do the deal and make them money.
Now in response to the foreclosure, the simplest and easiest way to make a 0 cost foreclosure is to purchase the property under a LLC. The private money lender holds 51% of LLC so if the borrower defaults he can sell the property at any time. This cost 0 dollars and can be done in a matter of days.

BTW on the property listed above the person who purchased it made 26k off it after all costs.

Your LLC ~~idea~~ increases the risk to the lender. It would prevent the lender from going after the borrower personally, and this ability gives the borrower an incentive to repaying even if the project fails.

Also it appears that the lender is taking on the vast majority (90%+) of the risk but only sharing in 50% of the profit Huh

this does not seem fair to me

I am guessing you have 0 experience in Real Estate investing correct?

Its not a LLC Idea it is a method it is very common so strike that through. The LLC is the escrow for the property understand that? Borrower defaults the lender has the property. Its like a legal multisig is the best way I can explain it.

Why would the lender go after the borrower if you have collateral worth more then the loan in your possession?

Why should I pay more then 50% when I am physically out there fixing and finding the property? Getting them ready for market and selling them?
If you want to come swing a hammer and work I will be will to give you more of the cut. I can wholesale you the property for +10K on top of the prices listed if interested and you can do it all the work yourself if you think you are up to it Wink

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Break down of math for you

Total Loan 73,000
Total Collateral 109,000

Its like someone giving you 149.32% collateral on your loan.

Should have mentioned
Not all monies are paid at once I should tell you, they are paid in phases after the property is purchased.
Phase 1 gets X% of rehab funds
Phase 2 Gets X% of rehab funds
Phase 3 Gets X% of rehab funds

The next phase is only paid when the lender is satisfied that the last phases work is complete.