How does he do it? (The mechanics of)

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Posted by SolidReturns on June 17, 2009 at 17:50:46:

So I came across a guy in my area who does the following:

1. Finds a real estate investor who needs money. Comes to an agreement to fund him, typically 4 points and 14%, interest only, balloon payment for the principal at 6/12 months. Loan is secured by a 1st TD against the property.

2. Finds private investors who he offers 8% on their money. Uses their money to lend to the real estate investor and makes a killing on the spread and the points.

So, I guess my question is, these investors whose money gets pooled...what is their investment secured by? An un-secured promissory note? Does the loan man put their names on the title of the property?

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