Does anyone Hard Money lend?

[DRILLINDK]

I'm lending some hard money to a friend of mine. More specifically $10,000 @ 15% for 45days. I really would like to learn more about how to find others to lend to and more specifics about the whole subject in general. Does anyone do this?

Here's the Wiki for those who don't know what this is:

http://en.wikipedia.org/wiki/Hard_money_loan

[mrpaseo]

I'm lending some hard money to a friend of mine. More specifically $10,000 @ 15% for 45days. I really would like to learn more about how to find others to lend to and more specifics about the whole subject in general. Does anyone do this?

Here's the Wiki for those who don't know what this is:
http://en.wikipedia.org/wiki/Hard_money_loan

I looked into loans but never went forward with it. Upon initial investigation it seemed that the people that were into it, took advantage of new people trying to get into it (Much the way realtors do).

As for loaning to a friend... In my opinion, never a good idea. As soon as the Friend owes you money, he/she will avoid you and you will start looking at them differently.

15% for 45 days? That seems a little excessive for a friend and what gives a return of over 15% (Thinking your friend would need to make money too) in 45 days? If it sounds to good to be true, it usually is.

[DRILLINDK]

thanks for your response mrpaseo! I agree with what you said about lending to friends in the informal fashion. However, this was very formal. There was a standard private lender contract drawn up by her lawyer that clearly spelled the terms out.

Although 15% may seem high, it actually a good deal in the real estate investing environment. Typically hard money lenders will want anywhere from 10-30% with 3-6% points (or 3-$6000 in fees) for a loan. Most people taking on these types of loans are flippers looking for some quick cash. So, rather than being charges $2000 and 25%, which is what she was offered, we agreed at 15% and no points.

In my friends case, she is going to use my money to acquire a forclosed home, make improvements to the house so she is able to acquire a conventional loan through a bank. The 45days is the estimated time for her to make the improvements required to allow the lender to lend to her. I'm the capital bridge so to speak.

[mrpaseo]

Hmmmm interesting. Appreciate the education.

[KTP]

Wait...a hard money loan is usually backed by value in real estate.

Does your friend already own real estate that is backing this $10,000 loan, or do you mean the loan will be collateralized by the foreclosure property she is buying? Won't the bank have first lien against that property?

For that kind of risk and a 15% return, I would probably do something like buy $10,000 of Apple stock and sell a in the money covered call which would give me 15% return when my shares were called away. Ok, well maybe not Apple, since $10,000 won't even buy you enough shares to write one contract lol. My broker doesn't offer minis yet.

[ladyjessica81]

Hard money loan

Hey drillindk,

I came across your post and i thought i could shed some light on your situation. I personally dont lend to friends, but $10000 @15% for 45 days does seem a little high but I guess it is always different for each situation. if you are still looking for advice you should check out this site i found while trying to get information for my property loan. It was very helpful for me when I renovated a 4 story mid century multi family home last year in San Diego, Ca. I ended up with a $250,000 @ 4% for 6 months but I 2.5 mil in profit. Good luck

[Goldy]

At first I bought 15% was a lot but when you calculate the interest it's only 185 bucks which now seems low. I'm always a bit leery about risking vast amounts of money (10k) for small returns but if you are really just doing it to help a friend then it's a bit easier.

[lewiskelly]

Sorry I never used this. I did not get the concept of hard money? is this hard cash used for business growth

[sam042013]

I know a person who offers hard money loan. He adds 10% as monthly interest. Your 15% interest for 45 days is just the same with his.

[DRILLINDK]

Yes, I'm first in line on the lien for the property. She's using this money as a bridge between buying the property and receiving a conventional bank loan. Once she is able to fix the house up making it livable and loan-able from the bank, they will give her an already pre-approved loan for the property and I will get my money back.


It's not 15% for 45, is 15% of $10,000. So, my interest profit is $1500 in 45 days I would never risk $10,000 for $185 return.

Hard money lending can be used in a variety of ways. Traditionally, it's used by flippers to leverage properties.

http://en.wikipedia.org/wiki/Hard_money_loan

[Goldy]

Yes, I'm first in line on the lien for the property. She's using this money as a bridge between buying the property and receiving a conventional bank loan. Once she is able to fix the house up making it livable and loan-able from the bank, they will give her an already pre-approved loan for the property and I will get my money back.


It's not 15% for 45, is 15% of $10,000. So, my interest profit is $1500 in 45 days I would never risk $10,000 for $185 return.

Hard money lending can be used in a variety of ways. Traditionally, it's used by flippers to leverage properties.

http://en.wikipedia.org/wiki/Hard_money_loan

Ahhh, I thought it was 15% APR. $1,500 is way better, sign me up!

[Mdumervil]

I Lost my job a couple of months ago and gave been scraping by to make ends meet. I don’t have any family members I can go to because they’ve all pretty much discontinued their relationships with me. I go hired at an insurance agency and I had to take the state exam in order to pass. On my first attempt I did not succeed . I cried for about 30 minutes because the test itself is expensive and I really didn’t have the money. I finally retook the test today and passed it and through all my joy I get the news that if I don’t pay rent by the 16th of this month I will be evicted. I pleaded and begged for them to give me an extension until the 21st because I start working Monday and thats when ill get my first pay check and they refused. If there’s anyone who can help me please reach out. I’m 20 years old and I’m a student in Orlando Florida I live away from my family and in just trying to make it. I just want somewhere to live . I'm willing to pay back any type of interest just please give me a chance