If you are a private investor and are looking for an alternative form of investment from the conventional stock and bond markets, we have the perfect solution for you. Hard money lending, or HML as we normally abbreviate it is a simpler and stress free way to make your investment. The only thing we require you to do it conduct due diligence before approaching us for help. Here are the things you need to know about us as Private Hard Money Lenders and our services.
In case you are thinking about becoming a private lender, you need to understand the concept of waiting for the maturity date of a loan before thinking about investing the money. While it is true that private lending pays off, most of the times the returns are not paid back as scheduled. Gambling with the loan could therefore lead to losses. Most people say that it is possible to get your invested capital back before loan maturity, and they use online loan exchange programs such to get the money back. However, most of these loans are normally sold at a discount, and this means that you will be losing a lot of money in the process.
Valuation of the collateral
We see many lenders losing money because they were not careful enough with the process of collateral valuation. If you want an accurate estimation of the amount of money an asset will cost, don’t just rely on photos. Take time and visit the location of the asset. You may be shocked at what details you will unearth. In addition to making your own valuation, ensure that you have asked for a second opinion from another professional in the field. In order to properly mitigate the risk, we normally recommend that you look for a broker price opinion or n automated valuation model. We are on manta which will help you avoid offering more money than the asset would fetch if the loan went unpaid.
Attaining the title
The other thing that you need to do is obtain title insurance. This insures your position as the lien holder and also protects you against forged property ownership documents. It is important to note that title insurance is an indemnity policy. This means that you can only be reimbursed for a proven loss and not potential losses. However, this does not mean that you should overlook this step. It is better to have all your bases covered than to lose money in the end.
Looking at the borrower credit
We see many private lenders ignoring issues such as the credit past of the people they are investing with and ending up with losses. While we do not encourage obsessing over the scores, it is important to look at the person’s ability to repay the loan when a balloon payment is due then start the flexible deals in repayment.