Most people who ask me about private lending start with the wrong question. They want to know what they’d get. I’d rather they start with what could go wrong, how the loan is protected, and how to tell a careful borrower from a careless one.
These answers are short. Each one points to a deeper page. Start with the overview of private money lending, then read how private money lending works and the risks of private money lending before anything else.
I’m a borrower, not a lender, and nothing here describes terms of any kind. If you’d like a personal conversation after you’ve done the reading, you can request one here and I’ll reach out myself.
Straight answers
What is private money lending?
It’s when an individual lends their own funds to a real estate investor for a specific property, documented by a promissory note and secured by a mortgage recorded against that property. Terms are negotiated privately and documented by attorneys. Overview: https://private-money-lending.benlovro.com/.
How do private lenders get paid?
Through the payments and payoff described in the promissory note. Typically the borrower makes payments as the note requires, and the loan is paid off in full when the property sells or is refinanced. What those terms are is negotiated between the lender, the borrower and their attorneys. I don’t publish or discuss terms on this site.
How is a private loan secured in South Carolina?
With a mortgage recorded in the county where the property sits, backed by lender’s title insurance and hazard insurance naming the lender as mortgagee. A closing attorney handles funds and recording. Details: https://private-money-lending.benlovro.com/how-it-works/.
Can I lose money as a private lender?
Yes. Borrowers can default, properties can lose value or be damaged, documents can have gaps, and recovery takes time. Collateral reduces risk but doesn’t remove it. Read https://private-money-lending.benlovro.com/risks/ before you lend.
What happens if a borrower stops paying?
The note spells out what counts as default and what the lender can do. Sometimes the parties work out an extension or a sale. If not, the lender may foreclose. South Carolina forecloses judicially, through the courts, which takes time and legal expense.
What does first lien position mean?
It means your mortgage is first in line among voluntary liens like other mortgages, so it is generally paid first from a sale or foreclosure. Some items, such as property taxes, can still come ahead. Title work and lender’s title insurance confirm your position.
How do I vet a real estate borrower?
Ask about completed projects, problems they’ve faced, their team, their valuation, their scope of work, their exit and backup exit. Verify what you can. The full checklist is at https://private-money-lending.benlovro.com/questions-to-ask/.
Can I lend from my IRA?
Some people lend through a self-directed IRA held by a qualified custodian. The IRA is the lender, payments go back to the account, and prohibited-transaction rules apply. Talk to a custodian and a CPA first. Concept overview: https://private-money-lending.benlovro.com/self-directed-ira/.
Should I use my own attorney?
Yes. Even if the borrower’s attorney drafts the documents, have your own attorney review the note, mortgage, title commitment and insurance before you fund. It’s a small cost for real peace of mind.
Is pooling money with other lenders the same as private lending?
No. One lender on one property is a private loan. Pooling money from many people, or advertising for lenders, can bring securities laws into play. If someone proposes a pooled arrangement, ask whether a securities attorney is involved and talk to your own.
Is Ben Lovro a lender or a fund?
No. I’m a South Carolina real estate investor who borrows to buy and renovate property. This site is education about how private lending works. Nothing here proposes a loan, describes an investment or sets out terms.
How do I talk to Ben about private lending?
Read the education pages first, talk to your attorney and CPA, and then request a conversation at https://benlovro.com/contact?topic=private-lending. It’s an inquiry list, not a sign-up, and I reach out personally.