Saturday, August 19, 2006

Private Mortgage Investing: A Good Alternative to Stocks and Bonds

Private mortgage investing, also known as hard money lending, is a super alternative to stock and bond investments. In addition to earning a much higher interest rate (typically between 12 and 16% and sometimes even more) than stocks and bonds, private mortgages are much safer. As long as you keep your loan to value rate at no more than 70%, view the property yourself, and get signatures on the necessary paperwork, there is simply no risk. Your investment is backed by the property, and at the very worst, you will end up owning the property and have to sell. Since your LTV ratio is low, you will make money on the sale! What other form of investment do you know of that has a high interest and can keep your initial capital safe?

To learn more, buy and read Private Mortgage Investing by Teri B. Clark.

Private Mortgage Investing Vs First Lien Mortgages

There are a lot of investments tied to real estate and mortgages these days, and each needs to be evaluated on its own merits. Some mortgage brokers match individuals with cash to real-estate investors buying properties either in foreclosure or for the purpose of fixing and flipping it. Although these are not necessarily bad investments, they are sometimes more volatile. It is very important when choosing to use private mortgages as an investment to understand what you are investing in. Many first lien mortgage programs do not deal with individuals buying homes that simply cannot get a regular bank loan. If you do choose to go with a foreclosure or for a flip home, be sure to follow the same principles outlined in my book and in other entries on this blog. Loan to value ratios should be adhered to, viewing the property is a must, and understanding the risks is essential.

To learn more, buy and read Private Mortgage Investing by Teri B. Clark.