Hard Money Lending

[phiphika1453]

Cliff Notes at the bottom.

My wife has recently started brokering loans for a guy who owns his own small broker company. This guy is pretty smart and has grown a fairly successful business. He has his hands, at least his money, in on the entire market of real estate investments. Brokering loans, lease-to-own self financing, flipping etc. If he thinks he can make a dollar doing it, trust me, he has his money in it.

He and my wife were talking and he asked her if we had ever considered investing in real-estate. She said we had but where we are right now, me about to start pharmacy school and two kids, we dont have the positive cash flow to take those types of risks right now.

He then asked her if he would be interested in doing hard money investments with him. She started telling him that we didnt have the resources to take care of the carrying cost in case things dont go according to plan. He didn't seemed too concerned with that as he told her that he would take care of that.

My wife told him that we would sit down and talk to him about it this Friday, so before I go talk to him I want to get any advice that anybody might have when talking to him.

So far my wife has told me this:

- He will find property that he wants to invest in
- He will purchase the house with cash and put mine and my wife's name on title
- We will go to BOA and use their non-seasoning policy to take out a HELOC
- The money from the HELOC will go back to her boss
- He will fund the repair cost of the home, he has his own sub contractors
- He said he will find the renters/buyers and apparently use his broker/ lease to own programs
-He said his profits have ranged from 8-20k with the majority in the 12k range
- We will split the profits, after operating cost, 50/50

I will not know anything else until Friday. Does anyone have any advice? I am still trying to figure out why exactly he wants us in on the deal.

I know he will want to charge points on the hard money loan and then we will be responsible for the HELOC, but what other advantages does he gain by including us in on the deal?

Cliff Notes: Wife's boss is willing to do a hard money loan and split flipping profits 50/50. What should I know before I go meet with him Friday to get more details?