Downsides / Risks of Providing Hard Money

[Mike O'Connor]

Hi all - there are plenty of good reads on the site about the downsides of using hard money, but I haven't stumbled across anything discussing the potential downsides of providing hard money.

Aside from the fact that your return is basically capped at your interest rate and the points that you charge, are there any other downsides to providing hard money? Obviously the person you are lending to could foreclose, but if you are smart in how you structure the deal you would then be receiving an asset at a fraction of it's worth.

Any insights from someone with experience in this area would be much appreciated!

Mike