Content Marketing

Make hard money loans and you get a high rate of return on your cash. You have to do it properly to be safe, of course. You also need a lot of money to invest to do this.

What are "hard money" loans? They are short-term loans (usually 24 months or less) made to real estate investors, usually so they can purchase and rehab a property. There is often a loan fee of as much as five percent or more of the loan amount, and up to fifteen percent or more annual interest. Why do they want these loans?

Hard money means speed and simplicity. When using hard money lenders, an investor can tell a seller "I can close for cash in a week." That gets the seller's attention, especially if he has had offers that have fallen through due to financing contingencies.

Hard Money - How It Works

An investor can usually borrow 65% to 70% of the property value, but not just the current value. As a hard money lender, you'll loan money based on the ARV, or "after repair value" (as determined by your appraiser). You'll look at the property, more than credit scores, another reason investors will come to you. Let's look at an example.

An investor finds a beat-up house that he can buy for $105,000. He has a plan that when complete will bring it up to a market value of $182,000. He figures it will take a month to complete, and two months more to sell it. He comes to you, and you agree that his projections seem reasonable. Your appraiser estimates a $186,000 market value when the project is done.

You agree to loan him 65% of the ARV, which amounts to $120,250. The excess beyond the $105,000 purchase price (about $15,000) goes into an escrow account, to be doled out as the repairs begin. Notice that if this investor keeps his costs down, he might do this whole project without any of his own cash invested.

The 4% loan fee you charge is $4,810, and is added to the loan balance, so the investor owes you a total of $125,060. You are charging him 15% interest, and he can pay just the interest due each month, but the whole balance is due within one year. If it takes longer than that and you have confidence in his plan, you might do another loan after that.

For the sake of our example, we'll suppose that it takes Two months to finish the house, and two months to sell it. The investor gets $181,000 for it. He paid $105,000, and he made a profit of $31,000 after a total of $45,000 for all of his expenses. he is happy. Now let's look at what part of those "expenses" went to you.

You had the buyer pay for the appraisal and any other costs of closing the loan, so your total investment was $120,250. This was repaid when the house sold, along with the loan fee of $4,810. You also collected four months of interest on the whole balance of $125,060 (the loan and the fee that was also financed), which totals $6253. Your total profit then was $11,063 on an four-month investment of $120,250. That's an annual rate of return of 27.6%. How many banks make that on their loans?

Does that seem like a lot for the investor to pay? Well it is, but the interest rate and other fees are irrelevant if they allow you to make a good profit. Remember that he made $31,000 after paying those expenses. In any case it makes sense that hard money lenders get paid well to take risks that banks won't take. If he screwed up the project, stopped paying, and you had to foreclose, you might be selling a half-finished house for just enough to get your money back.

Suppose you keep most of your money out there in these kinds of loans. Since it isn't all invested all the time, and is making only 5% in the bank, you average just an 18% return. What does that do to a $200,000 investment portfolio in 12 years? It makes it into 1.6 million dollars. You can see why investors with cash make hard money loans.

Bonds And Gilts
3 Bureau Report Equifax Experian Trans Union Credit Report All
Advice For Men And Women
Define Credit
Healthy Snacks 100 Calorie Packs Nabiscoworld
Ign Gears Of War
Speedy 39 S Audio Repair
Singles India Indian Dating Hindu Dating Christian Dating
Dj Quik 39 S Top 5 West Coast Producers
Newsweek International Europe S Fallen Angels The Eu S Newest Economies May Be Headed For
Kreisiraadio Dj Raven Vs Kreisiraadio M6tetumees Mp3
How To Approach Women 3 Actions To Remove Your Fear
Work From Home Jobs Resources Variety Work At Home
Website Monetization How To Make Money With A Website
Avant On Yahoo Music
Home Theater
Beltran And Hern Ndez Help Mets Sweep Nationals New York
Least Affordable Us Real Estate Markets
How To Seduce Women And Create Attraction
Shelley Lowery
How To Make Money On Net In Contribute Suggestions
Learn The Law Of Attraction From The Teachers Featured In The Secret
Colorado Real Estate Coloradosprings Co Real Estate
Sumiton Cell Phone Jammer Plans Property Taxes
How To Pick Up Women
Portland Braces For A Run On Allen Wrenches
Preventing Programs From Opening When Windows Starts Windows
How To Seduce Women
Iowa Caucuses Make Or Break Test For Biden Campaign Cnn
Dj Rectangle
Lenders Agree To Delay Of Debt Payment Wtvy
Commercial Real Estate Paralegal Fort Lauderdale 09 The
Cover Case Ipod Iskin Evo3 Ipod Acessorries Treo Cover Case Superstore
Dating Advice Relationship Quiz Online Dating Advice For Men
Poker Is Good For You
Make Money Online Tips Fast And Easy
Cheat Code Central Microsoft Xbox 360 X360 Release Dates
Moneylist Profits Discover Exactly How To Make Money From Free Ptr
Diabetes Diet Create Your Healthy Eating Plan Cnn Com
Nike Rooney And The Sanchez Boys
Wired Talks To Dj Spooky Reggae Trumps Digital Mashups Again
Dispelling Internet Dating Myths
Prudential Real Estate Florida
Yahoo Is The New Philly Phanatic The Motley
Myspace To Enable Selling Music Usatoday Com
Dating Russian Women Top Sites Russian Women Girls Ukrainian
Dating Tips Secrets To Attracting And Meeting Women
Mark Warren Photography
100 Free Personals Online Dating Service At Datehookup Com
Ipod Music On Squidoo
Quoted Mlive Com The Ann Arbor
The Best Place To Meet Women Is This
Apple
First Baptist Church Corona Californiaincludes
The Wdw Radio Show Show 28 August 19 2007 Your Walt
Apple Ipod Nano
Not Mrs Robinson
More Millionares Created Through Network Marketing Click
88785
Tuesday Pm Green Links
Capital One Phone Numbers
The Internet Your Business Tool
Amazon Com Vitamin E Hair Loss
Make Money Surfing The Web
Big Brother
Ysl Reversible Small Leather Tote Shox Tl2 Tl2
Are 4 Nfl Exhibition Games Too
Cheap Disney World Vacation Packages
Flirting With Tehran
How To Spot Genuine Signs Of Female Attraction
Stop Pushing Him Away With Your Fears Amp Emotions
Minneapolis St Paul Star
Real Estate El Paso Tx El Paso Texas Self Storage
Ac97 Audio Driver Realtek Vista
Disney Channel September 2007 Schedule
Puma Clyde X Yo Mtv Raps Doug E
Free Christian Audio Book
Myspace Video Codes Myspace Music Video Codes Music Video Codes Video Codes Myspace Music Myspace Music Codes
Hulk Encounter 3d Attraction 4 Sale
Hillary Clinton To Win
Using Pheromones To Attract Women Do They
Marketing Daily Activist Group Urges Disney To Prove Baby
The Pre Foreclosure Property Investor S Paperback Target Com
Jet Audio Player
San Antonio Texas Real Estate Information Online
Mlm Lead Companies Exposed Don 39 T Buy
Hilton Located In The Walt Disney World Resort Air Hotel
Get Laid Tonight Adult Dating Personals
Derek Gehl Blogs Photos Videos And More On Technorati
Just In Drama At Disney
3 Secrets To Keep Him Coming Back For More
Can Ebay Sellers Make A Living From An Ebay
How To Make Money Online By Sharing Videos
Disney 39 S Gallery Ratpatootee
Insulate Your Stock Risk With Bonds The
Commerce City Slider Cell Phones Women S
Laurel Wholesale Mobile Phones Toggle Coats Real
Bank Of America Alaska Airlines Manage Your Card
How To Make Money Online With Ebay Yahoo And Google Yahoo Shopping
Real Estate Mcallen Tx