Using private money in unstable investing environment

[Gil Segev]

I listened in on a webinar on raising money in a changing market from another site earlier this week where a team of savvy investors went out of their way to teach us listeners how to get other investors to trust us with their cash (aka "use private money") in these unstable times where traditional lenders limit their exposure by tightening their lending rules so we can continue with our business. They discussed how much safer RE is when compared with the stock market these days and that the average investor would be happy with just keeping the value of their investment funds from falling so we are actually helping them with their problems. 

Now don't get me wrong, I am all for using private money but don't you find it cynical to use money from investors who fear investing in the stock market these days? RE may be a more stable investment vehicle but can anybody really guarantee keeping their investors' money safe or even turning a profit with the lack of visibility we have in the market 6 or 12 months down the road?

[Jeff S.]

Great post, @Gil Segev. I agree with you and find this selfish and absolutely irresponsible. What makes one a “savvy” investor? That they can organize a webinar and label themselves that? Was the title of the webinar, “How to Take Advantage of Naive Investors?”

Idiots.

We could argue whether cash in the bank or in hard assets such as real estate is safer, but please don’t tell me that investing in your property now is a good place to place my funds.

The treasury will soon print $2 Trillion in cash. With loan defaults on the rise, record unemployment numbers, and states delaying evictions and even proposing rent cancelations, there is not a living breathing human being on the face of the Earth now who knows that their property is a safe investment. How reckless.

I wish I had a voice in that webinar. No doubt, I would have gotten booted :-)

From a lenders point of view, I can tell you that predatory lending is still illegal. If you cannot establish that your borrower has a good deal, you really can’t make the loan. This applies to both consumer and business purpose loans and yes, I know that TILA’s Ability-to-Repay rule does not apply to business purpose loans. It’s always illegal to take advantage of a borrower.

Sad to see it happening, Gil, but awesome points.