Got a lot of money? Don't know what to do with it? Hankering to find something to fill your days with? You might want to consider hard money loans, if you think you're capable of successfully managing your money and can read your customers enough to push away possible troublemakers.
It isn't that hard to become a hard money investor so long as you're careful with who you give your money out to. But what exactly is a hard loan?
They're typically 24 month or less loans given out to real estate investors, more often than not so they can buy and then resell properly. But why would they want a hard loan? There's often very high interest rates involved.
The reason is simple: they're fast. Hard money loans require a minimum of bureaucratic red tape since they're carried out on a personal level. More, they're likely to be more flexible when it comes to terms and repayments, again because they're personal.
So how does it work? Usually an investor will buy a house that they think they can repair and then sell off. So they'll go to the lender – in this case, you – and ask you for enough cash to purchase the property. You'll agree, tacking the extra interest on. It's now in the investor's interest to make enough off that property that they'll cover both your expenses and put some extra money in their pocket, along with funding the costs of repairing the house. If done properly and speedily enough investors can make a heap off cash off of these transactions.
Bear in mind, however, that you're taking quite a risk dealing in these transactions. With the potential for great profit also comes great concern: if the investors reneges on you for one reason or another you could be left footing the bill for a half-completed house. More, he could simply run off with your money. Always be wary of investors looking to borrow your cash, but at the same time, don't let the risk discourage you. You could stand to earn a lot in the long run.