Do I need to collect the payments on loans I make?

In today’s continuation of the private lending FAQs, I answer the question of: Do I need to collect the payments on loans I make?

Feel free to model your own private lender FAQs to suit your own distinct needs as you go out and raise private money for your real estate investing.

Here’s the answer:

We usually set up the loans in one of two ways: payment in full when the loan is paid off or monthly payments.

If we agree to do payments when the loan is paid off in full, then you will receive one check for the amount borrowed along with all the interest earned directly from the title company, escrow company or closing attorney when we sell the property (or at the end of the agreed upon term of the loan).

If we agree to make monthly payments, we usually set up an automatic payment to go out to you from our checking account each month for the amount of the agreed upon monthly payment.

Until my next post,

James

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