The one remaining option for real estate investors is borrowing money from private lenders. The definition of a private lender is an individual that you can negotiate directly with on a personal basis to borrow money for real estate investments. The money can be used to purchase rental real estate investments or to supplement funds borrowed from a bank to cover down payments.

If you want to start your own private lending program there are number of things you need to focus on before you begin. I have created a list of questions that you can review and think about that should help you establish your own private lending program.

• Will you offer both 1st mortgages and 2nd mortgages or just one or the other?
• What will be the maximum Loan-to-Value (LTV) for each?
• What interest rate are you going to offer for each?
• Are you going to offer any upfront or back end points?
• If you do 2nd mortgages, will you pay a higher rate and what rates is that?
• What are the minimum and maximum terms for each program?
• Are you going to record the mortgages or is the lender going to record the mortgages?
• What is the minimum investment for the 1st mortgage program and the second mortgage program?
• Will you offer monthly, quarterly, semi-annual or annual payments or all the above?
• Will you pay simple interest or compounded interest?
• Will you offer a no-payment option with 100% Principal and all accrued interest at maturity?
• Will you allow early payoff if requested by the lender?
• How will you handle a lender's request for early pay off?
• How quickly can you respond to such a request?
• Will you offer a minimum earned interest or prepayment penalty?
• What will you do if you need two lenders on one deal?

I know this is lot, but please review and start to think these items through as it will be the guts of your private lending program.