Private money lending is attractive because of the freedom and flexibility it offers. You can make your own hours, pick and choose your clients, and get paid for your time no matter how much you work. In this post, we will discuss some tips to make money as a private lender, so let’s start;
Money Lending: How To Get Paid
Joint Ventures
It’s no secret that getting paid for your work can be difficult. But if you’re a private money lender, you’ve got one of the best opportunities to make money while helping people who need it.
Joint ventures are a great way to get paid as a private money lender for your services. A joint venture is when two or more parties join forces to develop or manage an asset or business venture. The concept has been around since ancient times when it was used by wealthy individuals seeking investment opportunities in their own countries that were too risky for them to invest directly in. Today, many businesses use joint ventures to expand their product lines or open new markets overseas without relying on other investors’ capital.
Exit Fees:
This loan structure requires the borrower to pay a predetermined amount at the end of the loan term. The exit fee is often negotiated and may be higher than an interest-only loan, making this structure more expensive than an interest-only loan. However, because you are required to pay back the entire principal amount at the end of the term, this becomes less expensive over time compared to an interest-only loan.
Interest Payments
Interest payments are one of several ways to generate income from a private money loan. The most common way to get paid is by charging a fee for making the loan. The borrower might pay interest on their loan in either a set amount or proportion to the amount they borrow. This way, the lender can collect money without making any effort.
Points
Points are essentially fees paid by borrowers in exchange for lower interest rates. Points are calculated as a percentage of the loan amount and are paid monthly, quarterly, or annually. These points can be deducted from the borrower’s principal balance at any time before being paid off, which means that if you make payments on your loan early and do not earn enough points to cover that amount, you will pay it back as a penalty.
