Comments on: Making money with none of your own http://www.livelearninvest.com/making-money-with-none-of-your-own/ Living life to its fullest by generating passive income through investments Thu, 02 Feb 2012 03:11:13 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Merez http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-339 Merez Thu, 19 Oct 2006 04:35:20 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-339 I've looked into becoming a hard money lender and it does have some very large pitfalls. Have you checked to see if doing HMLs falls under the jurisdiction of your state's banking department? I know here in Iowa, there is an annual license fee of a few thousand dollars as well as a requirement for audited financial statements of the company(which cost a pretty penny). Of course this can be gotten around if you are just doing this infrequently and not as a business (which doesn't apply here as a LLC set up for such would be a qualified business). Two big costs I can see are insurance and any bad debt expense. Granted, both can be gotten around to some extent. For insurance, by limiting the number of and amount of the loans, you don't have much to cover, which in turn reduces your premium. For bad debt, you should probably be doing first position loans with at maximum loan to current value of 65% to 70%. Also, you will probably want to become familar with how your jurisdiction handles foreclosures and the process of it. You also need to check what your state and local usury laws are. I've saved the best (or worse) for last. You have to be very, very careful about how you advertise for investors due to the fact that the SEC has some very strict rules about publically available debt and equity securities. And if you don't dot all the i's and cross all the t's you could be in a world of hurt. I’ve looked into becoming a hard money lender and it does have some very large pitfalls. Have you checked to see if doing HMLs falls under the jurisdiction of your state’s banking department? I know here in Iowa, there is an annual license fee of a few thousand dollars as well as a requirement for audited financial statements of the company(which cost a pretty penny). Of course this can be gotten around if you are just doing this infrequently and not as a business (which doesn’t apply here as a LLC set up for such would be a qualified business).

Two big costs I can see are insurance and any bad debt expense. Granted, both can be gotten around to some extent. For insurance, by limiting the number of and amount of the loans, you don’t have much to cover, which in turn reduces your premium. For bad debt, you should probably be doing first position loans with at maximum loan to current value of 65% to 70%. Also, you will probably want to become familar with how your jurisdiction handles foreclosures and the process of it.

You also need to check what your state and local usury laws are.

I’ve saved the best (or worse) for last. You have to be very, very careful about how you advertise for investors due to the fact that the SEC has some very strict rules about publically available debt and equity securities. And if you don’t dot all the i’s and cross all the t’s you could be in a world of hurt.

]]> By: Ken http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-337 Ken Tue, 17 Oct 2006 20:41:37 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-337 I don't think the late night models are talking about hard money lending when they say no money down. They are talking about buying properties using no money down. I get investors by simply asking. Just find people who want more than a 5% return on their money. I don’t think the late night models are talking about hard money lending when they say no money down. They are talking about buying properties using no money down.

I get investors by simply asking. Just find people who want more than a 5% return on their money.

]]> By: Brendan http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-336 Brendan Tue, 17 Oct 2006 20:20:53 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-336 How do you get investors? The "late night" models tend to make you think you can start such an operation with no money down and no money to begin with. I find it hard to believe that you could successfully start this type of business without having money in the first place. <a href="http://catchagideon.blogspot.com" rel="nofollow">Catch a Gideon</a> How do you get investors? The “late night” models tend to make you think you can start such an operation with no money down and no money to begin with. I find it hard to believe that you could successfully start this type of business without having money in the first place.

Catch a Gideon

]]> By: Bring the Cash Flow http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-334 Bring the Cash Flow Tue, 17 Oct 2006 16:19:11 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-334 <strong>Investment Corp v1.0...</strong> … A man after my own heart! Great work Ken. Using the money of risk-averse investors to make yourself money. The only thing I’m leary about in this particular scheme is the amount of risk involved. I suppose a simple title search will t... Investment Corp v1.0…

… A man after my own heart! Great work Ken. Using the money of risk-averse investors to make yourself money. The only thing I’m leary about in this particular scheme is the amount of risk involved. I suppose a simple title search will t…

]]> By: Harrison http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-331 Harrison Tue, 17 Oct 2006 12:31:42 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-331 Good idea to give a try! Your theory is using OPM (Other People's Money) Good idea to give a try! Your theory is using OPM (Other People’s Money)

]]> By: moom http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-330 moom Tue, 17 Oct 2006 02:39:44 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-330 This business is a bank. This business is a bank.

]]> By: Ken http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-328 Ken Mon, 16 Oct 2006 23:09:38 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-328 It's a real simple structure for now. I know it will get complicated in the future. I can't give out too many details yet but basically, my LLC is borrowing money at say 5% from people. That's all the people know and care about. They know that their money is going to be secured by a 1st mortgage in real estate. The LLC takes the money, let's just say it comes out to $100,000, and lends it to someone at 10% as a 1st mortgage. Every month the LLC gets paid around $800 and it pays the people $400, therefore making $400. The LLC doesn't take long to set up at all, a few weeks at the most. Probably could be done in a day if you had to. I had one set up for my real estate already, but it was sitting empty because I sold the real estate that was in it. I don't want to disclose the terms yet as it is somewhat of a private network at this point. OG, email me if you'd like to know more. It’s a real simple structure for now. I know it will get complicated in the future. I can’t give out too many details yet but basically, my LLC is borrowing money at say 5% from people. That’s all the people know and care about. They know that their money is going to be secured by a 1st mortgage in real estate.

The LLC takes the money, let’s just say it comes out to $100,000, and lends it to someone at 10% as a 1st mortgage.

Every month the LLC gets paid around $800 and it pays the people $400, therefore making $400.

The LLC doesn’t take long to set up at all, a few weeks at the most. Probably could be done in a day if you had to. I had one set up for my real estate already, but it was sitting empty because I sold the real estate that was in it.

I don’t want to disclose the terms yet as it is somewhat of a private network at this point. OG, email me if you’d like to know more.

]]> By: RealOG http://www.livelearninvest.com/making-money-with-none-of-your-own/comment-page-1/#comment-327 RealOG Mon, 16 Oct 2006 17:12:31 +0000 http://www.afterreadingrichdadpoordad.com/2006/10/15/making-money-with-none-of-your-own/#comment-327 What are the terms you lend on? How does someone get into your network of investors willing to lend money and what is the return? Awesome idea! What are the terms you lend on?

How does someone get into your network of investors willing to lend money and what is the return?

Awesome idea!

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