So why private investors are so important to your foreclosure investing business?

A traditional way to get money for your foreclosure investments is through a hard-money lender. The hard-money lender will generally charge a percentage of the amount borrowed, or what is known as points. Three points would be three percent of the transaction. For example, if you borrowed $100,000, at 3 points, that would be $3000.

Many hard-money lenders charge interest-only on their loans, meaning they get their principal back in full and the way they make their money is on the interest. In a short term proposition this is not a bad scenario because at the beginning of any amortization schedule, the majority of the money paid out of the monthly payment goes to the lending institution. However, I have seen hard money lenders charge as much as 15 points on smaller deals to be able to fund the deal. Read the rest of this entry »


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