Investing in Bridge Loans

[Pscam10]

What is everyone's opinion on investing in bridge loans?

I have a close friend who along with his brother have made 100's of thousands of dollars over the last couple of years. First by investing in them and then second by actually becoming employees of the company and recruiting investors. The deals are usually 45 days in duration and makes the investor approximately a 15% profit.

There only stipulation is that you keep your money invested for at least 3 deals - about 135 days. You are provided with a 1099 at the end of the year for any money that is withdrawn from your account.

Has anyone ever been involved in this? It seems to good to be true - and usually that means that it is...

[hawk59]

what can go wrong? how much do you lose when it goes wrong?

[Pscam10]

[ QUOTE ]
what can go wrong? how much do you lose when it goes wrong?

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From what I understand, these are all commercial bridge loans. The danger is if someone defaults on the loan. You money will get tied up until all the litigation is completed.

I have the feeling that I should of invested at least 3 years ago. Back then, you were getting paid 20% every 45 days. I just always had this little voice telling me something wasn't kosher about this.

I can't figure out why everyone wouldn't be doing this?

[midas]

1. What event are you "bridging" to?

2. What types of companies?

[Pscam10]

[ QUOTE ]
1. What event are you "bridging" to?

2. What types of companies?

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Commercial land purchases.... I don't have specific details on the type of companies.

[midas]

This seems very shady - I doubt that anyone has made all the the money they claimed.

1. The term bridge loan is meant as a short term loan with a specific event (sale of asset, IPO, refinance,etc.) utilized as the method of repayment. I have no idea why companies would use a bridge loan for commericial property - unless they are real estate developers building on the land with the intent to sell in the short term.

2. One of the golden rules of investing is that if you don't understand what you are investing in - it is probably wise to avoid.

[Off Duty]

Um, anybody ever heard of Dan Harrington?

www.anchorloans.com

Always remember lending is a business of trust.

[DesertCat]

[ QUOTE ]
Um, anybody ever heard of Dan Harrington?

www.anchorloans.com

Always remember lending is a business of trust.

[/ QUOTE ]

"From the recording day on, until the loan is paid off (usually 5 to 8 months later), the investor earns a 10-12% annualized yield which is paid in monthly payments."

10-12% annualized sounds realistic, maybe even conservative (but given it's Action Dan what would you expect?).

20% in a few months sounds extremely speculative.

[midas]

One frequently asked question is: "Why does a borrower come to Anchor Loans instead of a bank?" There are a few reasons:

"We can process a loan in a few days, while a bank might take 45-90 days."

"The borrower may not be able to qualify for a conventional type loan due to tight banking regulations."

Reading in between the lines - this Company charges high rates for risks a bank won't touch - nothing wrong with that except you are earning what you deserve.

Also, lending is not a business of trust - it's a business of security. You may trust someone but they may not have the ability to repay a loan.

[DespotInExile]

This sounds like a Ponzi scheme. True bridge financing, while expensive, is nowhere as expensive as the returns you're quoting. Avoid.