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Updated 3 months ago on . Most recent reply
![Ray Hernandez's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/968111/1694887603-avatar-rayh54.jpg?twic=v1/output=image/cover=128x128&v=2)
Becoming A Short Term Lender?
I have some money to invest but just recently started thinking of being the "bank" instead. I've never looked into it so I don't know much about it from the lender's pov.
All I know is I am interested in doing short term loans so I guess that would make me a hard money lender?
Some questions I have are:
- Would 3-6 month loans be feasible?
- Can you make good money doing this if you consistently lend compared to owning a buy and hold prop?
- Is this better or worse than buying and holding or can they not be compared?
For my last question, the reason I'm wondering if you can compare the two is because I don't know if I should pick one over the other. I'd assume holding a rental property long term would be better for net worth over short term lending but maybe income is better as a lender? I don't know. I'm unsure if this decision would be based more on a "whatever fits your goals" kind of thing.
I appreciate any and all feedback :)
cheers
Most Popular Reply
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Originally posted by @Ray Hernandez:
@Will Barnard Thank you for your honest advice! Means a lot to me.
Yeah I can't believe I hadn't thought about the little to no tax advantages with lending. I was so focused on the liquidity of it.
I'm very interested in apartment complexes and have been trying to learn as much as I can about investing in them. That said, if you were in my shoes would you advise looking into syndications or trying to find deals to buy and hold myself? I have the time to try and find deals myself so that's not necessarily a problem. I don't mind if I'm not 100% passive. Just want some good returns.
But doing both does seem like a great way to diversify. I get the tax benefit of rentals and more liquidity of lending. Good idea. And yeah I have tons to think about lol. Thanks for giving your input!
Honestly, as sexy as it sounds to be active and go after them on your own, as a rookie, even with some book education, the real world can knock you on your azz so I would suggest going with a very experienced and proven sponsor. You won’t hit a homer most likely but you will be safer and then learn from the real world experience. Perhaps after that you can try one on your own or with a partner.
So then the trick is, which sponsor to work with. That itself is no easy task for someone without experience. So for that, I would recommend getting a referral from someone trusted, someone without an agenda and someone who is not getting paid to refer you to the sponsor.