Earn 10 to 12%+ interest on hard money investments, paid monthly
Hard money investments are unique investment opportunities for Accredited Investors. If you make $200k+ per year, or a combined $300k+ per year with your spouse, then you are an Accredited Investor for 2023 and/or 2024.
You can also qualify with $1M+ of assets outside your personal homestead property. Some financial securities licenses may also qualify you; if you have one you probably know. Little City works with accredited investors to fund hard money loans for Texas real estate investors.
What makes hard money investments more attractive than stock investments?
- Monthly payments. One of the worst aspects of stock investing is that, unless you have a security that’s paying dividends, you must sell your stocks to realize any profits. Private mortgage lending on the other hand, provides stable, monthly, interest income.
- Stable value of investment. A mortgage investment is not subject to the volatilities of the stock market. Since these are loans with 30%+ equity, there’s room for market change long before it affects your investment principal. Little City typically issues 1-year loans, quite short-term for the real estate space.
- Research is done for you, and presented concisely. Local experts professionally evaluate the real estate behind the loan. Little City and/or a 3rd party appraiser provides a value, we offer to lend the borrower up to 70% of that value, and a lender’s only job is to review the proposal details and fund the deal.
- No investment maintenance or ongoing research. Stock investors must keep their eyes on a lot of information to be successful. Timing can make or break a stock investment. Real estate mortgage investments require much less attention from their investors. The rate of return doesn’t change if the project is over-budget or sells for less than the borrower thought it would. A hard money investor is insulated from most of the risk.
Who is an accredited investor in 2023? Someone who meets at least ONE of the following criteria:
- $200k + income for 2 years / reasonable expectation to earn the same this year.
- $300k + income with spouse for 2 years / reasonable expectation to earn the same this year.
- Individual net worth, or joint net worth with spouse, that is $1 million + with their primary residence excluded.
- Licenses such as Series 7, Series 65, and Series 82.
Why are hard money loans so secure?
Low loan to value provides excellent security.
Little City Investments will only lend up to 70% of a property’s value, so there’s 30%+ equity in every loan we make. We are also strictly funding investment properties, we do not lend on homesteads.
Let’s say a borrower owes Little City $700k on a $1M value property. They can’t make the payments any longer, and we post for foreclosure. Do you think they’re going to stand by and lose $300k of equity, or take a discount to sell it quickly to someone, before the foreclosure? It’s rare for borrowers to risk foreclosure when they have so much equity at stake.
Little City is also rather conservative when it comes to valuation, more on that here. Also, importantly, Texas has a very swift foreclosure process for investment property.
How are hard money investments better than direct real estate investments?
In a word: time.
Whether you’re flipping, building, or even just land lording, there are time commitments that just don’t exist with hard money mortgage lending.
Our lenders typically spend 10 to 20 minutes evaluating a hard money deal to decide if it’s a fit for them. After that, our lenders are just collecting monthly interest payments until the end of the loan term or payoff. More information and hard money investor FAQ on this page.
Why have I never heard of hard money investments?
Direct investments in real estate mortgages have historically been limited to institutional investors.
Mortgage pools aka CDOs and CLOs (collateralized debt/loan obligations) and mortgage-backed securities are common, but those aren’t a direct 1:1 investment in an individual mortgage. Many CDOs and CLOs are also highly leveraged, with loans up to 95% LTV, and these loans were regularly made to borrowers with low credit and high debt.
Contact us for more information about private mortgage lending. Diversifying your investments into private mortgage lending can open an incredible monthly income stream for accredited investors.
Passive investments with high security and consistent monthly income are ideal for investors that don’t have time or energy for the stock market game.
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