Quick answer: A private real estate loan summary should explain the collateral, valuation basis, loan amount, loan-to-value ratio, borrower contribution, payment terms, repayment plan, and material risks. If renovation is involved, it should also explain the budget and how funds will be released.
An attractive return catches attention. But it takes more than a rate to understand where your capital is going.
Before participating in a private real estate loan, you should be able to explain what supports the loan, how the borrower expects to repay it, and what could delay that repayment.
Here are the questions to ask.
1. What property secures the loan?
Start with the property’s location, type, occupancy, and current condition. A single-family renovation in Metro Atlanta presents different questions from a vacant commercial building.
The summary should also identify the proposed lien position. Ask how that position will be documented and verified through title review.
2. What value supports the loan amount?
Understand whether the stated value reflects the property’s current condition or its projected value after renovation.
Look for the evidence behind that figure, such as comparable sales, property condition, and the valuation method used. A projected resale price should be clearly distinguished from current value.
3. What is the loan-to-value ratio?
Loan-to-value, or LTV, is the loan amount divided by the property value used in the calculation.
For example, a $210,000 loan against a $300,000 property value equals 70% LTV. This is an illustration, not a Brey Lending quote or lending commitment.
LTV helps explain leverage. It does not eliminate the risk of declining values, selling costs, or delayed repayment.
4. How much is the borrower contributing?
Identify the borrower’s cash contribution and any existing equity separately.
If the project includes renovation, review the scope, budget, contingency, and funding process. Ask how work is verified before additional rehab funds are released.
Borrower investment matters, but it does not guarantee that the project will succeed.
5. What are the term and investor payment terms?
The summary should explain the proposed loan duration, investor interest rate, payment schedule, and when principal is expected to return.
Ask what happens if the borrower repays early, misses payments, or needs more time. The written transaction documents should explain the applicable terms.
6. How will the borrower repay the loan?
A repayment plan should identify a specific exit, usually a property sale or refinance.
For a sale, consider the work required and the expected marketing timeline. For a refinance, ask what must happen for the borrower to qualify.
A backup plan deserves attention when the primary exit depends on favorable market conditions.
7. What could delay repayment or cause a loss?
Relevant risks may include renovation overruns, weaker property values, borrower execution, and difficulty selling or refinancing.
Ask how delays, defaults, and additional costs would be handled. Real estate collateral does not guarantee repayment, and capital may remain committed longer than expected.
How this connects to Brey Lending
Brey Lending works with capital partners on short-term loans secured by non-owner-occupied Georgia investment properties, with a focus on Metro Atlanta and surrounding counties.
Its capital lender process includes reviewing the property, borrower’s plan, proposed terms, first-position security, and loan documentation.
A summary helps you begin that review. It does not replace the transaction documents.
Want to understand how Brey Lending presents a lending opportunity?
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Call/Text: 470-470-989