Posts Tagged ‘Loans’

What is Hard Money Lending And When Should You Use It?

Posted January 12, 2011 by Bernz

Seasoned real estate investors often use a type of financing called “hard money lending”.  While this type of financing is mostly used by investors specializing in single-family properties, it can also be used to finance commercial properties.  If you’ve never heard of “hard money lending”, you’re not alone.  Most people haven’t.

One of the reasons this type of financing is not well known outside of the real estate investing industry is that the source of funding comes from private parties.  There are no large stockholder-owned corporations doing this kind of lending.  Typically it’s a private individual with deep pockets.

Another reason you haven’t heard of it is that a very specific type of business loan.  “Hard money” loans are usually set up as short-term balloon mortgages.  The monthly payments consist of interest only, and the principle is paid at the end of the loan term in one lump sum.  It’s not a good long-term financing vehicle, but it can be an excellent source of funds for investors who are acquiring fix-up properties.

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Posted in Financial Goals, Investing Strategies, Loans | 3 Comments »

Should You Lend Money to Your In-Laws?

Posted May 21, 2009 by Bernz

Money is a sensitive issue even among family and friends. Money has ruined relationships between spouses, siblings, parents and children, and between friends. But money issues between in-laws are particularly sensitive. If this is the case for you, what can you do? Should you let your in-laws borrow money from you during difficult times? And if you decide to lend them money, can you expect it back? There are a lot of issues to consider before letting anyone borrow from you.

lendingmoney

Even the most credit-worthy individuals can become unreliable when they borrow from family members. They might reason out that the money is between families anyway. Even with the best intentions, it is almost impossible to treat the transaction in a business-like manner when dealing with the in-laws. However, before you think that lending money to in-laws is a terrible idea, there are some points you can keep in mind. This will enable you to get repayment in an easy, efficient, and friendly manner. (more…)

Posted in Loans, Misc | No Comments »

Will the “Bad Bank” Plan Work?

Posted January 30, 2009 by Bernz

As discussions continue in the White House and on Capitol Hill about what the next steps should be in helping banks survive the current economic crisis, one idea that keeps floating to the top is the “bad bank” plan. The Treasury or the Federal Deposit Insurance Corporation would set up a new bank to buy up all of the so-called “toxic” assets carried by major financial institutions. This would allow all of the other banks to cleanse their balance sheets and give them the liquidity they need to continue operating, according to the theory.

badbank1The “toxic” assets include the bundled derivatives and mortgage-backed securities that got the banks into trouble in the first place. The complexity of the assets became so great that banks, regulators, and auditors were unable to place a value on them as they could no longer be directly tied to individual mortgages. As mortgage failures increased during the recent real estate collapse, the assets’ worth looked dismal. The market for them dried up and banks were left holding the proverbial bag.

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Posted in Debt, Financial Goals, Misc | No Comments »

Need a loan? By pass banks and turn to social lending

Posted November 17, 2008 by Bernz

Saturday morning I woke up to a dead cell phone. I left it in the charger so I knew it wasn’t the battery. My first thought was that my cell phone company went bankrupt. Three months ago this idea would have never entered my mine. Only today company bankrupts are so common, you expect them. Like most of you, I don’t have a home land line, but when you don’t have access to something is when you need it the most.

This got me to thinking about money and lending.

As the credit crunch continues to tighten no one is going to be able to get traditional bank loans. Americans won’t be able to get money to fix the roofs on their homes, let alone get a new mortgage. What options are available?

If you’re thinking pay day loans. My advice? Skip it. These places are bad deals for several reasons: Outrageous interest rates (think above 20%), market saturation in economically strapped communities, and they don’t facilitate good money or debt management.

If you need a loan for a business start up, new car purchase, or for home repairs your best bet for a loan might be peer-to-peer lending. This is an arrangement where you borrow from groups of people rather than traditional financial institutions. (more…)

Posted in Loans | 1 Comment »


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