Thinking about getting started with being a hard money lender...

[Andrew Votsis]

So I live in Boston area which is a very competitive market as you all know I’m sure. Landlord laws are not great here. I’m just trying to find some creative ways to maximize my returns while also learning along the way. Any input is greatly appreciated. Thanks

[Joffrey Long]

Andrew and Jennifer,

Great posts, in my opinion.  I'll second what Jennifer said, you can run into a lot of regulatory and legal problems with hard money lending, so I would start by trying to find out first, is there a trade association in your area for hard money lenders?  Next, if there isn't, I'd go to the institutional lending trade assn. and from there, find out who knows hard money.  Also, sometimes title and escrow companies will know.  Spend some money educating yourself first.  You could also go through brokers, again, you have to find who knows what they are doing.  (If you were here in California, I could help you, but I don't know the first thing about your area - and laws and regs vary on a state and local level.)

Jennifer, I will disagree with you that it's not a wealth-building strategy.  Although you won't get the huge appreciation upswings, a lot of that is offset by the continual building / compounding of assets/interest.  Also, owning actual real estate is partly running a business / partly investing, while trust deed investment can be tailored down to primarily investing.

I can tell you that for the past 45 years I've done both, and they're both great for wealth-building.  There's an advantage to doing both.  You, Jennifer, pointed one out - putting your money to work between (ownership) deals.  Other advantages have to do with hedging your risks against both deflation and inflation, owning property and lending give you a great hedge against each negative, your loss on one side is your gain on the other.

I'm on the Board of Directors and Education Committee for our California Mortgage Association, the hard money trade association.  This certainly doesn't mean I know everything, it just makes me very aware of how much more I need to learn!

I hope this was useful.

Joffrey Long

www.HardMoneyExpertWitness.com