Got my first check from the money lending
January 4th, 2007 by KenricTwo months ago I raised $25,000 from individuals who wanted a better return on their money than a standard savings account. I loaned the $25,000 to a company that pays a steady 11% interest rate for a period of one year. The check to my LLC was $230, which isn’t bad. Now I take some off the top for my management fee and then divide the remainder of the money into proper percentages and send it out to the individuals.
I’m thinking about using the Rich Dad philosophy of using cashflow to afford things and depositing $50,000 of my money with them, which cashflows $460/month and then buying a car with $450 payments. In five years my car will be paid off, I’ll still have the $50,000.
Hmmmm, $460/mo can get me a decent $20,000-$25,000 used car…
Posted in Finances | 9 Comments »
Stumble it!
What do you reckon the default probability is for an 11% return?
By moom on Jan 4, 2007
I say delay gratification, reinvest the 50k in a better deal, and in 5 years buy a $200k car.
Rent it out to posers once in a while and use it for photo shoots to get a write off. Also doubles as a chick magnet for gold diggers in scottsdale!
By RealOG on Jan 4, 2007
Moom,
There’s always the possibility of default. There are two solutions set up by the company in the event of a default.
The $25,000 loan is part of a $3,700,000 1st loan on a commercial property. If the property defaults you have the option of getting your capital back within 30 days or to be a part of the foreclosure process in which case any capital gains would be paid percentage wise. Historically, most investors choose to go through the foreclosure process instead of opting out.
By Kenric on Jan 4, 2007
OG, now you’re thinking big!! I need to deposit $200,000 so I can get $1800 a month. That should cover the payment for a used F360.
By Kenric on Jan 4, 2007
Kenric,
I’m interested to know how you’ve managed to network so well to attract investors with money, but who do not necessarily have the resources to invest in real estate directly, or find their own investment opportunities that pay 11%.
Also, what guarantees do you make to your clients on their capital? Just that it is secured against a 1st mortgage?
Thanks!
Nick
By NLG on Jan 5, 2007
How are they paying off the principle? Is this an “interest only” loan? I’m a little confused over why the check is only for $230.
Also, if the property defaults, or the borrowers declare bankruptcy, how can you get your capital out without being part of the bankruptcy process?
By ubu50 on Jan 6, 2007
ubu50, it is an interest only loan with the full principle due in 1 year.
The capital out is being put up by the members of the larger portion of the loan.
Basically, if the borrow defaults, the majority holders of the loan will buy you out. It is in their benefit to try to get as much stake of the loan prior to going to foreclosure.
By Kenric on Jan 7, 2007
Nick, I think you’ll find that there are many people out there who do not invest or do not wish to understand investing. There are many people who will gladly take 5+ % return. There is no guarantee on their capital.
By Kenric on Jan 7, 2007
hmmm that dint seem to post
By bill or puss_n_boots_owner@yahoo.com on Jan 7, 2008