Hello all,
I would like to start investing my money into hard money lending and I would like to know if anyone knows how I can get started in this. I think this is a great way to make money since it is secured by RE at a low LTV and the rates/fees are favorable.
I could invest the money in other investments but after doing research on my own, I have to believe that this is one of the best ways one could invest money.
Please let me know your opinions. Please tell me the pros and cons. Thanks.
Hard money investing is a very good way to diversify. Like any investment, the most important thing to look for is good management. The downfall is that the properties are not appraised well and that the borrowers are given too much flexibility with the funds they receieve.
The problem with the larger multi-state lenders are the the control mechanisms are very difficult, meaning that the more areas and properties that are in their portfolio, the greater the risk of default.
You might be better off going to an investors meeting in your area and trying to connect with several investors that may need a partner. You could get a better return on your investment with no work. You could have better control over knowing what your money is invested in.
Tom
I have a unique property that I am looking for an investor to hold the mortgage note. See my entry - looking for private lender.
How much do you want to invest and where? What is your threshold for potential losses? I usually know people who need hard money loans - but you should understand that they need this type of money for a reason. They can’t get more conventional loans - loans at cheaper rates. Also, how long are you willing to let your money out?
First of all, I want to thank the people that have replied about my post and giving me some tips.
Second, I have 50K that I am willing to invest at this point. I don’t know if I would have to pool my money with other investors being that this amount is somewhat low (at least where I live) but to get started I think this is the number I am willing to invest.
Third, I would invest anywhere that I know the investment is sound. While I think I may be more comfortable in certain markets than others, I don’t care where I would invest geographically.
Forth, I would like to invest for about 6 months to 1 yr.
Fifth, I say all this but don’t know if this is the right or wrong way of investing. I am meeting with a local hard money lender that my business partner knows and has been lending hard money for 25+ yrs. Hopefully he will be a great resource.
You answered your own question in the end, Just make sure you know your tolerance for pain (loss). Remember we have a reputation for being “greedy” and everything else under the sun, but this really is a high risk business.
Please read my post “Looking for hard money in a niche market” if you are interested in making a hard money loan.
I could use a small money man to supply me with down payment and closing money short term on properties.
I found this old thread after a search…I know of people that invest with hard money lenders and they have very secure situations…My friends only invest when they are first position on the mortgage/deed…At a very low LTV also.You dont do hard money loans to just anyone,maybe the lenders do but you have to know before hand…Like lending to a builder (high end) that owns the land for the most part outright with little money owned on it in a very upscale area…You take first position at a very low LTV for him to finish the work and if he defaults even better,you keep the property and the half built house but this is only for high net worth lenders,not anything less 700k-1 mill…IMO 50k would be better invested splitting it up into some cashflow properties with a good cash on cash of %20 or better…Investing 50k any other way wouldn’t make much money…