Can you Invest with a Hard Money Lender

3 Replies

Hello All,

Has anyone invested with a Hard Money Lender? Is it possible to do so? Or is this sort of investing only limited to accredited Investors?

Is it possible to invest and also pick what projects you would like to help fund?

I understand there are internet based companies like fundrise but I am more interested in brick and mortar local businesses.

FWIW I'm in the North Atlanta area.

Originally posted by @Robert Starnes :

Hello All,

Has anyone invested with a Hard Money Lender? Is it possible to do so? Or is this sort of investing only limited to accredited Investors?

Is it possible to invest and also pick what projects you would like to help fund?

I understand there are internet based companies like fundrise but I am more interested in brick and mortar local businesses.

FWIW I'm in the North Atlanta area.

Most hard money lenders will want to be cashed out in one, two or three years. Your project has to support 12% interest.

Hard money lenders are each as different as fingerprints, @Robert Starnes . This includes where they obtain their money.

The larger HML's often get their money from Wall Street. Here the sums can be into hundreds of millions of dollars. They don't need you.

Other lenders run mortgage pools. These are syndicated operations that rely on investors. Depending upon how the syndication is structured they may or may not require you to be accredited.

Many hard money lenders are actually brokers. They find the borrowers, as well as investors like you, and originate the loan. You provide the funds and end up with a note, mortgage, and all other docs in your name.

Obviously, when you invest in a mortgage pool, you are diversifying into many loans and your name is not on any one, but as a pro-rata member of the syndication. When you lend thru a broker, as above, you own the one loan and are the named lender.  Alternately, with less money, and if legal in your state, you could invest with others in a fractionalized loan.  Each has its pros and cons, including the due diligence you must apply, but there’s nothing wrong with any of these options.

There are many other ways lenders get their money (self-fund, IRA's/401k's, hypothecation, HELOC, etc, etc.). I suggest you call, or better, personally meet, as many HML's as you can and ask if they accept investors. You might be surprised.

I think smaller, local private lenders would be open to this. Nation-wide, or even regional lenders, would have their capital source (whether it their own or a warehouse line) set up and it wouldn't interest them to reach out to individuals for money to fund their loans.