Debt financing investing

[Wilson Liu]

Hello all,

Just joined the community and I'm a newbie who hasn't started purchasing properties yet.  Hoping to learn a lot from others here. 

Something I came across that may be an easier way for me to break into real estate investing is being the capital.  A company in my area that typically purchases, fixes, and manages commercial properties in cheaper markets is planning to assist in the build and sale of a tract of townhomes in southern California.  They are issuing debt notes for a 24 month term and 12% interest.  I don't have all the details yet as they are still finalizing terms of the agreement. 

I'm wondering if others have invested this way before and if this seems like a reasonable return. The company is relatively young but appears to have good management and finances. I currently invest in some of their commercial properties they issue as REIT with a 6% dividend payout. I would assume these homes would sell in a hot real estate market in SoCal. It seems a little like lending businesses money through Lending Tree but I haven't seen rates as high as 12% for good credit borrowers there.

Any feedback and advice would be appreciated.