Posted by Ed Garcia on December 01, 2000 at 10:39:36:
Allen,
Let me not mince words, he’s a LOAN SHARK.
There are Hard Money Lenders that make loans predicated on equity position. These lenders will charge excessive fees such as 14% and 10 points, but will give you enough time to execute your transaction to completion. Many of them will lend 3 to 5 years allowing you enough time to clean up your credit, or substantiate your equity position and over come the seasoning issue to refinance the property at a later date.
A hard money lender, lends with a return in mind, but knows if something should go wrong, that they have enough equity in the deal to recapture their money.
Your friend who allows 30 to 60 days knows going in that the investor that he lent the money to, will have their back to the wall with his time frame. His intention is to milk the deal by rolling his loan over for another 30 to 60 days or pick up the property. He’s making 100 to 500% and is with out a doubt, a loan shark.
I recently met a guy who will look for anything he can to finance. He started off with lending to people who buy homes, fix them up, then resell them. He fronts the money, and they pay him 1 to 5 times the return. Example: He lends a guy $1500. He will get back $3000 to $7500 in 30-60 days (on closing). If they dont pay him his money back + interest then he confiscates the property! I was just wondering if you need a license to do this and if you have limitations on how much money you can make in return. I have heard that loansharking is illegal. Is this considered loansharking? If not, whats the difference? I would like to start out lending small amounts and getting my returns and then lending bigger amounts. Only problem is that I would like to get my returns much quicker if possible so that my money isnt tied up in just one investment. Im in the state of Florida so if anyone knows what I can and cant do, I would greatly appreciate a heads up. Any answers to these questions you can give me would be greatly appreciated.