Do This Before Doing Private Money Lending

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never buy a note or something you wouldn’t want to own because you always have to understand that if things don’t go well, you might have to take over the property. And that’s the nice thing about private money lending is that you own title, it’s a collateralized loan. And some of them were situations or when you’re in a deal with non collateralized debt. And what that means in layman’s terms is if the guy screws up, you’re not protected. So the worst case scenario here where if the borrower defaults, you take it over, you really want to take that thing over, don’t maybe you should reconsider your loan to value calculation. The long term value calculation is a great way to start out assessing the risk. So if you’re taking over property that’s $80,000, and you’re giving them $100,000 loan, you’ve got 80% loan to value typically you want to stay anywhere from the 60 to 80% range, something does happen and the borrower does default. Maybe you can cut losses at 20%. And at least that way, your original investment is covered there.

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