Posted by John Corey on May 23, 2006 at 05:16:07:
Lets assume you can lend at such rates and maybe earn the points in addition. Do you know how to judge if a deal is a good one as a lender? Do you understand the paperwork involved in setting up the loan? Have you studied the foreclosure process so you know what to do and when?
I am not saying that you can not learn. Just that the way you are posting implies that you are a bit green. Remember that even if you get the points, earn a high rate of interest and have a lien on the property a foreclosure could mean you actually lose some of your principal.
Lenders who make private loans for RE deals commonly have a strong RE investing background or they go through someone else who does. In the second case they are still responsible for the ultimate decision as to if the loan is likely to be a good investment. What they gain is better access to deals that likely make sense. Still there are no guarantees.