Private Investor. That's you. It's hard enough for people to borrow money these days from banks/credit unions unless you have a FICO of 750+. A friend of mine couldn't get a bank loan of $33,000 even though his own money was IN that bank. After a three week wait, the bank said no.
Banks love to say no. There is an old saying: "You can get money from a bank as long as you can prove you don't need it."
8. Make sure the loan is NET....after fees & expenses. If the borrower needs $50,000...add on all the fees & expenses over that amount.
9. Set up a small, cheap office somewhere, or operate out of your home until you start making money and get your feet-wet.
1. Set a minimum amount of money in your bank. Start with $100,000
2. Only loan the money for a set time: 6 months to one year works
3. Make sure you loan the money on secured property via a 1st trust deed. Never, ever, loan if you have to be in 2nd position behind someone else
4. Only loan at 65 percent of the property value (do an appraisal)
5. Charge the borrower 10% interest on money loaned by your group
6. Charge the borrower 2 points (%) of money borrowed as your fee, plus any escrow, title, appraisal fees.
7. Line up a part-time escrow or title person to handle the paperwork and pay them up to $30 per hour. It's fast/easy with proper software.
To become you're own bank and make damn good money, you must know the basics. This takes money, so if you don't have the cash yourself, bring in family or friends to invest. I know a group who have six investors - each who put in varied amounts - and collect 12 percent interest on their investment each month. So....here's what you need to know to begin:
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