Loaning money

DonButtons · #1 10-16-2006, 03:43 AM

How is this business?

I can possibly join some of my very wealthy friends who are pooling up a big bankroll to loan out money at very high rates given proper colleratal is there. Like a house or something we can take away. Talking about a 13pt avg supposely.

My friend is young, makes like 170k a year, and his dad makes 8figures running a coffee company so im not worried about being angled. But worried about the operation, he says a family friend would run it thats legit.

Just need to know some first hand info from anybody that has experience or knows more about the business.

snowbank · #2 10-16-2006, 04:02 AM

Good place for your money as long as the person handling the business end of it is good at what they do. Example: say you loan it for real estate. If they have a property worth $200k and you get it for $150k you loan the $150k and get your return on it. If they default you own a house with $50k equity. If the person running the business messes up and the property is only worth $160k and they default you are stuck with a house you don't want. 13pt is VERY high, so it's probably a bit more risky, possibly using your money for 2nds which would leverage out the property to maybe a greater degree than would be good to protect yourself in case of a default for the borrower.

homeslice · #3 10-16-2006, 11:07 AM

No one who is credit worthy is going to ask for a loan with 13pt. You can get a home equity loan w/ 6.1pt.

dc_publius · #4 10-16-2006, 11:28 AM

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No one who is credit worthy is going to ask for a loan with 13pt. You can get a home equity loan w/ 6.1pt.

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Except other investors... Hard money lending is a viable established business.

Nicholasp27 · #5 10-16-2006, 12:20 PM

a sorta-aside question: local money lending places here in Georgia advertise that they will give me a 9% apr on my money...i realize this is because they lend it out for a higher %, but why wouldn't they just get bank loans, etc for less than 9% to use? and is my money really safe being invested somewhere like this?

BradleyT · #6 10-16-2006, 12:45 PM

[ QUOTE ]
a sorta-aside question: local money lending places here in Georgia advertise that they will give me a 9% apr on my money...i realize this is because they lend it out for a higher %, but why wouldn't they just get bank loans, etc for less than 9% to use? and is my money really safe being invested somewhere like this?

[/ QUOTE ]

I wouldn't think it would be easy for them to go to a bank and get a $100,000 loan just so they could re-loan the money to degenerates with a HUGE default rate.