Hello,
Does anyone know of any information regarding the steps necessary to become a sucessful HML?
jt
It begins with some deep pockets or access to someone who does.
Thanks for the quick response.
I have a lot of equity in my home. I was approached by a small local brokerage firm that has been in business for about 4 years about the tax advantages of taking a equity loan out at 6.25%(rate at the time) and they would pay me 8%.
I’m not opposed to the idea, but want to know what I should look for in the contract to make sure that my money is secure. So…I’m looking for information about the pros and cons of this type of investing.
Never loan money you cannot afford to lose. Borrowing @ 6.25% to earn 8% (1.75% net) is NOT a good deal. Your mortgage partner is loaning it out at 14% thus making 6% on YOUR money.
Cons fo HML:
1.) You can lose money - When dealing with property that needs rehab and then needs to be resold you can always lose significant sums of money. Based on the foreclosure laws in your state you could lose months of interest while you foreclose. No to mention you don’t get your money back until you sell the property. If you cannot sell for what you have loaned…you lost money
If you DO loan out money be the LENDER directly. Use the same mortgage docs that the “big guys” use. And for goodness sakes get an attorney
Thank you DHLC for your reply.
You are right this is not money that I can afford to lose. I shall think this through carefully, and consult a real estate attorney when I’m ready to be a lender.
You would do well to hookup with some one who has done hml and work with them as an investor with your own pool of money and your own pool of loans for about 6 mos or 2 years ;D
You should be able to get 10% to 12% secured by trust deeds by good credit borrowers