New Member from NYC thinking of Private Lending

[Jason Topolski]

My name is Jason, I live in Brooklyn/Tri-State area and wanted to introduce myself to BP forum members.

I'm a professional working in New York City, in the technology area. While the job pays well and is stable, it is extremely taxing in terms of time and stress. As such, it has taken a considerable toll on the quality of my life outside of work.

While doing some research, I came across this site and was pleasantly surprised at the quality of information that is being provided (for example the Ultimate beginner's guide to RE Investing) and the willingness of participants to provide advice to others.

In order to alleviate amount of time that my work consumes, I wanted to investigate going into Private Lending to slowly supplement my income. My plan is to progressively replace my wage income with interest income from Private Lending which would allow me to work part time rather than full time.

Being new to Real Estate, I have a lot of questions regarding the benefits and risks involved in this investment strategy. Do you think Private Lending is a viable investment strategy worth pursuing? I am not looking to charge crazy interest, but rather to partner with someone who's strategy is house flipping and who needs capital and enable them achieve their goals while at the same time working towards mine.

Appreciate any advice/comments.

Jason.

[David Beard]

It's certainly a very viable strategy, particularly if you're in an area where it's difficult to find good cash-flowing rental property.

Especially early on (and probably even later on), do not lend to those with little or no experience. Stick with more seasoned investors, and always ask for at least a 5% contribution from the borrower (preferably 10%), to help keep them honest, regardless of how strong the ARV (after rehab value) will be on the property. You should be able to earn 12-20%.

You can also place your funds with a professional hard money lending company for around 10%, not a bad way to learn the business.

As you gain more experience, you can look into 50/50 profit-sharing arrangements or other riskier structures, with the potential to earn 25-30%.