Becoming a Hard Money Lender

3 Replies

I'm a newbie to real estate investing, and I'm considering launching a hard money lending business. However, I'm not sure how much capital I need to start. I'd like to start off small to minimize risk. What would be the ideal minimum capital needed as a new hard money lender?

as a general rule.

HML are in the business of providing capital for either fix and flip or bridge type situations for buy hold.

you can ( WHERE ITS LEGAL) broker money and make a fee.  All states require a license for anything owner occupied.

commercial purpose loans to LLC in many states require no license. So thats the first thing you check. 12 states do require licenses even for commercial purpose loans.. And you can see that on any CA HML that is real their NMLS number will be on the first page of their website generally.

YOu can loan your own money.. Mortgage banking.. you can get fellow investors to make the loans and you broker them and or you can get a LOC with a commercial bank and lend their money ( no experience would be quite hard to get a LOC though.

Given the income potential  5,000,000 should be the starting point for a business that will bring you in a decent amount of income given the risks and time involved..  lending a few hundred grand not going to do much in the way of a business but its a nice avenue for investor as opposed to owning the assets you simply become the bank.

In addition to the answers you have gotten, you have the option of using some of your own money along with raising OPM to increase your yield. We have a fund established that we lend from. We give our investors a great return and we make a spread in interest rate and origination points. I'd be happy to talk offline if you would like more details.