Episode 009: What Is a Note and Why It’s the Most Important Thing in Lending

What makes a real estate loan secure? It’s not just the property—it’s the paperwork behind it, especially the note, which holds the true power in any lending deal. In this episode, Rich Lennon dives deep into how to structure a note, what to include, and why small mistakes in documentation can lead to huge financial losses. Rich breaks down everything from loan terms to default conditions, personal guarantees, and the hidden risks if your paperwork isn’t airtight. 

You’ll Learn How To:

• Write notes that protect you in every lending situation.
• Set clear repayment terms, interest rates, penalties, and default clauses.
• Differentiate preference vs. supporting lenders in fractionalized lending.
• Use personal guarantees and cross-collateralization to secure investments.
• Avoid costly mistakes with proper legal terms and document deadlines.

Who This Episode is For:

• Private lenders and fractional investors seeking to secure their investments.
• New and experienced real estate investors dealing with private notes.
• Anyone who loans money against real estate and wants to avoid mistakes.
• Passive investors seeking safe returns and protection in real estate deals.

Why You Should Listen:
Rich Lennon shares real-life examples and specific clauses that protect your money in lending deals. If you issue or invest in real estate notes and want to avoid costly errors, this episode gives a practical, step-by-step breakdown of a secure note. Don’t lend money without understanding these essentials.

What You’ll Learn in This Episode:
(00:51 - 01:45) Importance of Good Paperwork  

(01:45 - 02:11) Deed of Trust vs. Mortgage 

(02:11 - 03:52) Key Elements of a Promissory Note  

(04:10 - 04:39) Choosing the Right Trustee  

(05:05 - 06:49) Loan Distribution Structure: Preference vs. Supporting Lenders  

(07:17 - 09:32) Repayment & Default Terms  

(10:02 - 10:29) Why Title Insurance Matters  

(10:58 - 11:19) First Position Lending & Tax Payments  

(11:19 - 12:48) Default Conditions: What Triggers a Default?  

(14:09 - 15:07) Cross Default & Cross Collateralization  

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