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    4 Replies Latest reply on Mar 29, 2008 1:35 PM by M1S96F1

    Private Lending Questions

    callaninv Newbie
      I have been involved in the real estate business for the last 5 years. My business is a combination of residential renovations, spec homes and I have one minor subdivision under my belt. Currently I do about 4 projects a year, in order to take this to the next level I am looking for private investors willing to lend money secured by real estate. I already have access to a number of banks and hard money lenders. The hard money lenders kill me with points and the banks have so many hoops to jump through, I can't close quickly on deals. Also with the down turn in the real estate market banks are looking for much larger downpayments for commercial loans than before.

      Anyway... getting to my questions. Since I don't know any private investors, I need to do a little marketing. My concern is marketing an ROI will I be violating any SEC or lending rules?

      Thanks,

      Nathan
        • Re: Private Lending Questions
          DomainDiva Ranger

          A guaranteed % ROI that does not perform will land you in a heap of trouble. With all of the hedge funds and investment banks now being sued by investors why would you even consider this? How would you consider yourself different?

          The bottom line is that banks are not loaning money on real estate projects right now.

          I can speak from experience as we own a three acre tract 3 miles from the new Cowboys statdium that we are developing. We lost the financing for the street and utilities and have had to barter out those services with a contractor that wants another piece of property we own. Nothing against us...its just that well the market is really weird right now and these banks have to look at all of the bad real estate they are holding as well.

          Back to your question. There are ROI guarantees that say you will have a return on your investment. As far as giving some sort of figure I would so steer clear of that. However if you are set on doing this, you will need to contact an SEC specialist. I would not touch anyones elses advice.
          • Re: Private Lending Questions
            LUCKIEST Guide

            Simple ROI works
            well in situations where both the gains and the costs of an investment
            are easily known.
            Other
            things being equal, the investment with the higher ROI
            is the better investment.

             

            In complex business settings, it is not
            always easy to match specific returns with
            the specific costs that bring them, and this makes ROI less trustworthy. . Simple ROI
            also becomes less trustworthy as a useful metric when the cost figures
            include allocated or indirect costs..

             

            Business investments
            typically involve financial consequences extending several years. In such cases, the metric has meaning only when the time period
            is clearly stated. Shorter or longer time periods may produce quite
            different ROI figures
            for the same investment.

             

            LUCKIEST.
            • Re: Private Lending Questions
              M1S96F1 Newbie
              The problem is that the market is horrible for residential development right now. I don't what areas of the country you are looking to develop but most areas such as Florida, California, Las Vegas are overbuilt. The private investors and private lenders that I deal with are not looking at any type of residential development unless it is in certain areas of the country. If you would like to discuss more, please visit my website, www.msfcapitaladvisors.com.