PML > CDs All Day Long

[AJ Smith]

12% APY for our Private Lender on this deal.

100% passively.

We borrowed the funds, we fixed the property

We sell it when it's beautified. 

I love thinking about it.

Instead of sitting in a CD at 5% interest

They got 12%, 

and helped revitalize an area. 

So many ways to make your money work for you in this world.

Whats your favorite way?

[Scott Trench]

I both agree and disagree. 

The PML is not FDIC insured. Every few decades, I will be foreclosing on a bunch of properties, and potentially taking a big loss in a few cases. A PML in markets like Phoenix probably didn't have a great time getting short-sold in the great recession. 

That said, over a long time horizon, and for investors who are willing to take chips off the table and not continually double down on PML, it's a great return and the spread is large enough to make a big difference. Especially in tax advantaged retirement accounts. 

I'm letting my PMLs mature after a 2 year experiment and going back into old-fashioned rentals. A 5-6 cap rental property, even one that is paid off, is about as good, after tax, probably lower risk than continuously doing due diligence on borrower after borrower and deal after deal 1-2X per year in perpetuity. 

That said, if I was retired, in a relatively low income tax bracket, or a real estate professional able to offset my commission income and interest income from PML with major cost-segregation, and wanted some spendable liquidity after a career in investing - PML all the way. 

A debt fund solves the passive investing issue, but brings on other risks as well.