How to Become a Private Lender

how to become a land broker

Private lending requires trust and a strong working knowledge of the banking and investment industries. Some countries such as Canada require that private lenders have an established and continuing relationship with a reputable attorney, pass licensing tests and receive certification before they begin to lend. Companies such as Kennedy Funding, Key Alternative Loan and Titan Capital loan several thousand to several millions of dollars a year to public and private borrowers. Private lenders help individuals obtain the funds necessary to gain a mortgage, attend college and start a business.

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Locate Solid Investments and Get Top Returns Providing Secured Private Loans

Complete focused training. Sign up to take an online brokerage licensing course with schools such as Anthony Schools, Californialicense.com and Allied Business Schools. Complete the training and pass the examination. Remain current by continuing to attend real estate, bank loan, property management and escrow courses online and offline. Gain in-depth learning about the industry you will be providing loans in.

Offer loans that are secured by collateral or assets that you own. Keep in mind that publicly distributed secured loans typically cover a repayment period of 25 to 30 years. Work with the borrower to set repayment periods as some borrowers can repay amounts of $100 or less with 10 or less years.

Study the market and identify one to two key investments. Keep

the amount of money that you lend to less than 75% of your LTV. Minimize your risk and expand your return on investment (ROI).

Verify that borrowers are financially solvent. Work with real estate brokers to confirm that borrowers are solvent and will repay the funds that you loan them. Also check with the federally approved Credit Alert Interactive Voice Response System (CAIVRS) to verify a borrower's credit standing.

Solicit the counsel of an attorney familiar with private lending investments. Ask the attorney to review the investment prior to signing the deal to make sure that the investment has merit and minimal or no pitfalls. Contact firms such as Technical Advisory Service for Attorneys (TASA) to get references for qualified attorneys in your area.

Select a reputable local title and escrow firm to process paperwork and details of deals that you make. Check in with the title and escrow firm regularly to ensure that the closing of your deal is being handled properly and that title insurance on real estate is issued. Pay fees related to the title and escrow service for work performed on your behalf.

Set interest rates that are comparable to what banks and other public institutions are currently lending. Check the Federal Reserve's official website each Monday to review current federal interest rates for instruments such as commercial paper, prime loans and government securities.

Source: ehow.com

Category: Forex

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