Hello Private Lender Nation and welcome to episode 117 of the Private Lender Podcast and the first episode of the year 2021. I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today, and I hope my voice finds you doing more than well. 

If you’re looking for practical tips and advice on Private Lending and how to keep your money safe then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!

This will be the first episode of 2021, and probably one of the least controversial. But before I say something to get me canceled, I would like to take a minute for some housekeeping:

Private Lender Podcast Facebook Group

If you like the idea of private lending but find yourself a little hesitant to begin then click HERE to get your feet wet with the help of a professional Hard Money and Mortgage lender.

www.privatelenderpodcast.com/ink

My friend Paul Lamnatos is ready to answer any questions you may have and help you get started on your Private Lending journey. Click the link on the webpage and provide your email address and Paul will reach out to confirm a time when you can speak to him about Ink’s lending criteria, their loan process, and how you can begin profiting from loans on properties located in the greater Houston area – in a very lender-friendly state! 

2020 is now over, and we Private Lenders have some of our own housekeeping to perform.  

The 1098

Even though the private loans I speak about are business loans, they are still considered a mortgage. Thus the lender is required to file IRS form 1098 and provide it to the borrower, indicating the amount of interest paid on the note over the course of the previous year. 

·        $600 or more of interest collected (including points charged).

·        Remember, points count towards the Usury limit in your state. 18% in TX

·        Must file and provide to the borrower no later than 31 January 2021

If you have your private loan serviced, which I strongly recommend you do, the note servicer/escrow company with do this for you and mail and/or electronically deliver the forms to you borrower.

I personally have one legacy loan with my partner Landon that I didn’t demand the use of an escrow/servicing company.

Here are some options if you don’t use a note servicer/escrow company:

·        Your CPA

·        Accounting software

·        Quickbooks or TurboTax

·        Online services

I just found 8 websites from a Google search (excluding Quickbooks and TurboTax)

The second order of housekeeping is the Fair Market Valuation for any investments, including notes, private entities, and real estate in your Self-Directed IRA.  

1. Real Estate – Appraisal, Broker’s Price Opinion (BPO), County Appraisal Value.

2. Note – If amortized, attach the amortization schedule. If interest only, simply state the current principal value in the “EOY 2020 Market Value” box and that the note is interest only in the “Comments” area.

3. Private Entity – A letter from a managing member on letterhead...