Why YOU Should Become A Hard Money Lender

[John Thedford]

Why YOU should become a hard money lender:

1. VERY limited risk if you underwrite properly
2. returns up to 60% per anum or more
3. easy easy investment--just collect mailbox money
4. much LESS work than being a landlord
5. returns are steady and will NOT fluctuate like the stock market
6. returns are guaranteed by contract unlike stocks
This is NOT legal advice, it is MY personal experience. My last loan yielded 36% per anum. I have one expected to pay off Aug 1 yielding 29% per anum. Like ANY investment, things can go wrong--BUT--you have a written contract AND good collateral if underwritten properly. There are lots of BS guys promising pie in the sky returns in the RE realm.

If you choose to become a HML you must KNOW YOUR STATE LAWS. Make great money and STAY OUT OF TROUBLE! My returns are in FL and your laws will vary as to rates, etc.

I would like to thank @Jay Hinrichs for helping me become better at this. 

[Jay Hinrichs]

John thanks for the mention:

couple items from my point of view

1. always do first position unless you have the money to pay off the first with cash if your going to entertain a second position if you do not have the CASH to pay off the first you can end up losing all your money doing gap funding or second positions.  In this business you have to hope for the best and plan for the worst.

2. For sure check your state laws.. if you hold your self out as a lender in any Manner in certain states CA being one you need proper licensure... failure to do so can lead to treble damages.. OR NV are other states.. One lender in Oregon that made HML here on 1 to 4 with no license ( they did 200 of them LOL) and should have known better.. One of my clients was able to payoff and deducted all payments from principal. Borrower was quite grateful for my advice on how to handle a unlicensed lender.

3. As discussed above RAtes are highly regionalized..

4. create long term lasting relationships  leverage over rate many times is what flippers are looking for if they want to scale.

5. Great way to start in this is with a really good local HML that will place your money for you.. they make points you make nice rate.. and see how it goes instead of jumping right in.

6. being a real estate agent or broker is a huge advantage as your in the industry and you can do your own comps.. no need for appraisals and all that garbage.

7. AS for starting a HML business you need MAJOR dollars I would say at least 1 million in cash and the ability to get a guidance line or other PPM type investors for another 5 million.. this will give you a 300 to 500k a year salary which is about the minimum you want to work for in this business in my mind.

Other wise its a great option for those that simply don't want to deal with the three TTT's and want better than bank rates.. nothing wrong with very stable great loans making 6 to 9% either... higher the return generally risk goes up.. just like buying rentals... go for high cap rate usually renter / tenant quality is tougher and risk is higher. Same thing here.