Heroic Investing
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Private Money Lending Might Be More Productive Than Wall Street

First responders who are a little tired of being bounced around the Wall Street “investing” roller coaster might be interested in an under-the-radar opportunity known as private money lending, also sometimes referred to in the media as hard money loans. The concept is pretty simple. There has always been a certain percentage of the population interested in procuring money either to buy a house or complete renovations, but for one reason or another don’t qualify for traditional financing through a bank or mortgage company.

As all good capitalists out there are aware, the market will find a way to provide. That’s where private lending steps into the picture. There’s nothing fishy or off-the-wall about it. Private lending has been around for a long time and there are some features of it that make a lot of sense for investors who have a chunk of money on the sidelines, looking for something to do with it.

Cons
The problem with hard money lending, and there can be a few if you aren’t careful, is that often there is a good reason folks can’t qualify for a regular mortgage. Maybe they have too high of a debt to income ratio. Could be there are other financial issue affecting their creditworthiness. The basic point is that a private loan is considered to carry a higher risk than other types.

Pros
When it comes to the upside of private money lending, there are two very good factors that make it appealing. The first is that a private loan normally carries with it a much higher interest rate, which is great news for the lender (you). How much higher? There are, of course, no guarantees in this or most other types of investments, but Heroic Investing founder, Jason Hartman, and some of his clients who have been using this method recently have been able to earn 12.25% in addition to being paid a $500 upfront funding fee by the borrower. The other factor that makes hard money lending so appealing is the short term nature of the loan. Most notes only run about four months.

One facet of this investment type which doesn’t seem to qualify as either a pro or con but merely a fact, is that the loan is not secured by income or perceived creditworthiness but rather by the value of the underlying asset, in this case the property itself. Private money lenders such as Hartman and his clients also have the first position on the loan in the event the borrower runs into difficulty. This simply means that as the lender you would stand to take possession of the property if something goes wrong with the payback schedule.

The big question that likely pops into your head is who exactly are these borrowers? As mentioned earlier, hard money lending is often associated with people desperately trying to avoid foreclosure or unable to meet the stricter standards of today’s traditional lending environment. What Jason has managed to uncover, though, is a set of borrowers with excellent credentials but due to the nature of their business model, specialize in properties that don’t fit meet the definition of a bank’s typical client. The borrowers we’re referring to are local market specialists who have partnered with Jason and his Platinum Properties Investor Network to recommend first class investment opportunities in income property purchases.

These local specialists like to buy distressed or other types of properties in need of a little rehabbing, fix them up, and either offer them to the network or sell them locally. This type of property has been classified as “transitional” by the lending industry, making it hard to qualify for that kind of financing. Once he became aware of the situation, Jason quickly realized that it was a perfect symbiotic solution to make private short-term loans from his own pocket. These specialists have already been vetted to the extent that a business relationship existed even before any money was loaned. Many of these people have spoken at Jason’s educational events and sent many a fine property his way. The point is that these are not random strangers wandering in off the street. Does the potential still exist for a default? Absolutely, but you’re likely to be well compensated for the additional risk, which hasn’t proven to be a risk at all yet.

Please feel free to contact Jason at 949-200-8008 if you have any questions or are interested in learning more about how to increase your nest egg through private money lending. Keep in mind that we NEVER recommend investing money you can’t afford to lose, no matter how tempting the opportunity sounds. Translation: don’t mess around with your family’s food or rent money!

The Heroic Investing Team

 

 

 

 

 

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