Hard Money Lending Advice

[Grace Porritt]

I am approaching retirement and I need to be careful about the influence of income on my SS benefits.  I have thought about starting to do some "hard money" loans on a short term basis for the right investors.  Interest income does not reduce my SS benefits.  I am in the process of refinancing a home with lots of equity and may consider cashing out some extra money to use for this purpose.  I would like some feedback on this idea.

[Kerry Boyle]

I recommend having an attorney help you coordinate the documents and entity. 

I highly recommend the following:

1. Only work with individuals you know and trust (preferably with experience, but your own experience should guide you).

2. Have an attorney make sure you are doing everything correctly (your closing package/mortgage/application etc).

3. Work in areas you know and personally ensure there is plenty of profit for the borrower. If you are unsure of anything about their project, make them use your contractor.

Personally, I wouldn't put my money into a HML unless it was someone I know and I really believed the deal worked. Risk is so high that the money gets tied up, project fails, borrower defaults and won't release the property to you and forces you to foreclose.