Are you interested in learning how to become a hard money lender? Let’s break down what this means and what you need to know to get started.
A hard money lender is also referred to as a private money lenders in Washington DC , or simply, a private lender.
Private lenders are investors who seek alternatives to the stock markets. These lenders want to locate more investment opportunities, so they seek opportunities in private or hard money lending.
If you understand the basics and perform due diligence for each deal, you can earn solid returns as a hard money lender.
Private or hard money loan returns often outperform the buying or selling of stock. However, you will need to take the time to learn how it works. And if you are willing focus and learn, you can hit home runs every time you bat.
So let’s do exactly that – learn the game of lending.
Investing in hard money loans is a lot like investing in a bond. It returns a fixed yield and pays off at maturity.
Example: If you make a loan to a borrower for $100,000 at 8.00% interest, and require interest-only payments, you will earn an income of $8,000 every year. And if the borrower does not default, the loan will pay off at or before the maturity date.
Tip: If you make a loan to a real estate investor who is in the business of flipping property, you should offer to lend the total project cost (acquisition of property plus renovation cost) only if the investor comes to the table with 20% down. This way, the investor has “skin in the game” and also provides you with the appropriate due diligence -proving why the flip project has the highest chances to succeed.