How Private Lending Works With an Acquisition Company

Not everyone who wants exposure to off market property wants to own one. Private lending is the other way in: you fund a purchase or a renovation rather than buying the property yourself, and the loan is secured against the property. This is a description of how the arrangement is normally structured, not an offer, and nothing here quotes a rate or predicts an outcome.

What private lending on residential property means

A private lender is an individual or a company lending their own capital directly, rather than through a bank. On a residential purchase the loan is short, because the project is short: the property is bought, the work is done, and the loan is repaid when the property is sold or refinanced. The lender is not a partner in the outcome. They are owed a defined amount on defined terms.

How the loan is secured

Security is the whole point of the structure, and it comes from the property itself.

• A recorded lien against the property, so the loan sits on title rather than on a handshake.
• A note setting out the amount, the term and the repayment conditions.
• Title insurance and property insurance naming the lender.

Those three are standard, they are prepared by a title company or a closing attorney, and a lender should expect to see all of them before funds move. A loan without them is not a secured loan.

What a lender is asked for and what they receive

An acquisition company approaching a private lender is asking for capital on a specific property for a specific period. In return the lender should receive the same underwriting the buyer sees: the after repair value, the renovation estimate, and the comparable sales behind the value, plus the closing documents naming them.

Terms are agreed on each transaction individually. There is no standing rate, no pooled fund and no ongoing commitment. When a project ends, the arrangement ends.

Questions to ask before lending on any deal

Ask what position your lien is in and whether anything else sits ahead of it. Ask who prepares the closing documents and who holds the funds. Ask what happens if the project runs long, because that is the ordinary case rather than the unusual one. Ask to see the comparable sales rather than only the value drawn from them. Then have your own attorney read the note. A borrower who resists any of that has told you something useful.

Working with 888 Estates

888 Estates sources residential property directly from homeowners in Florida and brings those opportunities to a small group of buyers and capital partners. Capital partners are contacted about specific transactions, with the underwriting attached, and terms are discussed for that transaction only. We do not operate a fund, we do not pool capital, and we do not publish returns.

Where to go next

Read what is in an off market deal package, since a lender should see the same one, or what a buy box is. Read more about 888 Estates, or browse every article in Investor Insights. To introduce yourself as a capital partner, use the investor application and say so. Questions can go to [email protected].

Common questions about private lending on property

What is a private lender in real estate?

A private lender is an individual or company lending their own capital directly against a property, rather than lending through a bank.

How is a private real estate loan secured?

By a recorded lien against the property, a note setting out the amount, term and repayment conditions, and title and property insurance naming the lender.

Is a private lender a partner in the project?

No. A lender is owed a defined amount on defined terms. They do not share in the outcome of the renovation or the sale.

What should a private lender see before funding?

The same underwriting the buyer sees, meaning the after repair value, the renovation estimate and the comparable sales, plus the closing documents naming them.

What should I ask before lending on a deal?

What position your lien is in, who prepares the documents and holds the funds, what happens if the project runs long, and whether you can see the comparable sales. Have your own attorney read the note.

Does 888 Estates operate a fund?

No. Capital partners are contacted about specific transactions with the underwriting attached, and terms are agreed for that transaction only. No capital is pooled.