Quote from @Chris Seveney:
Quote from @Ben Whittington:
Quote from @Nicholas L.:
@Ben Whittington
i hear you and that all makes sense... if you don't have that much liquid, though, I think it will probably be a huge, huge grind. with hard money or private money, as you may know, the goal from the investor's standpoint is actually to pay it back as fast as possible. so you get a couple points to originate the loan and then maybe a small amount of interest. and you're taking a lot of risk... if you only have enough for one project at a time, and that project goes south... you're taking the property back and trying to sell it.
@Jay Hinrichs agree?
I hear you. I've read a few books on this and understand the process and the risk involved. That's not to say there isn't more to learn or that there won't be hiccups, but while I appreciate your hesitation, I am aware of what I'm getting myself into.
To your point on not having much capital - that's why I posed the question about raising capital. I need to set realistic expectations and timelines.
If you do not have the capital you will not get it.
1. a bank will want a personal guarantee and will want a substantial net worth.
2. A hedge fund will want the same.
3. You can attempt to raise from a 506c but it will cost you $25k to get started, then if you did get your first $100k and you are paying them 10% and you are making 12%, - great you just made $2,000 and that is assuming you were able to fund an entire deal immediately and have zero holding or carrying costs.
Not to be pessimest, but just because I read a few health books does not make me a doctor, nor does reading a book on history make me a historian.
This business is not easy.
Forgive me if I gave off the impression that I thought this was easy. To think something is easy is to depreciate the value the blood, sweat and tears that people like yourself have poured into this profession. The purpose of my "read books" comment was to illustrate that I understand the risk associated with this and that I am responsible for my own actions. I'm simply looking for advice from people seasoned in this field and to try to continue gaining as much knowledge as possible. I do not claim to be a professional.
Thanks for your insight. Understood on the 506c. What are your thoughts on 506b? Does it make any difference if capital is coming from friends/family versus "strangers?"
As stated above, I do have some capital. Should I get a couple of deals underneath my belt using my own capital before looking for outside capital?
