Hard money myths… have you heard any good ones lately? There’s just a few of them out there.  Today let’s just take two of my favorites off the top: “Hard money lenders charge a higher interest rate because they take more risk… we don’t take risk.  Now, wall street likes to measure risk according to a “delta”, which is little more than that those lines on a chart where risk and return intersect.  It gives the analysts something to do with crayons to justify their credentials while selling you on pulling that lever on the slot machine…again.  There is no delta in hard money, in my opinion anyway.  Hard money interest rates are a function of how many investors are chasing hard money loans. And with the uncertainty in the stock and bond markets investors are seeking a safe haven through alternative investments, like hard money, and because of that our rates are lower than they’ve ever been.  Hey wall street… your delta is a mess, by the way.    Here’s another one: Hard money lenders really want to take ownership of the property through foreclosure.  I gotta crack up when someone calls and says “Hey Mark, this deal is soooo good that you’re going to be lucky to take it back”.  Really!??  If you ever thought this was true I have news for you; when you take a property back through foreclosure it’s because nobody showed up at the auction to bid, because the marketplace perceived that there’s no equity/profit in the deal and 99 times out of 100 they’re right.  Now you’re the proud owner of real estate that you have to throw money at and then hope you can sell it for retail.  It’s never any fun.  So here’s the take away…Hard money rates are low and hard money lenders have an overwhelming incentive to make loans to borrower who succeed.  Got a loan that makes sense? Know a borrower who likes to pay their mortgage on time, give us a call.   Kenwood Mortgage Investments would love to hear from you.
If there are any other myths out there that you’d like us to address please send them along, you might see them as the subject of another video podcast.
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