Diversified Investing - Short and Long Term Loans
Having worked directly with hundreds of lenders over the
years, I've seen an impressive variety of loan structures. People are lending money for some of the most
amazing reasons, and the returns vary from paltry to obscene. Non-profits are lending without interest
while ultra-high-risk lenders attempt to double their money in two months.
In this and the blog posts to follow, I hope to share my opinion on how lenders have succeeded in making a living by lending money.
Diversifying Your Loan Portfolio with Loans of Variable Lengths
Balancing stability, profitability, and cash flow is tricky
for a private lender. We need to ensure
we have enough cash coming in to pay the bills and make new loans. We don't want to have our money tied up in
unproductive long-term loans, nor do we want borrowers to miss payments
because the amount due is too high for shorter terms.
Creating a selection of loan products with varying terms can
help you find the perfect match for each borrower.
Short Term Loans
Short term loans are excellent for borrowers with strong, steady
income that require more capital for a prudent expense than they currently
have. One ideal situation includes an
honest, hard-working borrower preparing for a large, non-frivolous expense.
For example, a very hard working friend of mine wanted to
start a company, and in his good fortune he got an incredible deal to buy all
the equipment he needed for $9000. He
came to my group of investors to see if we could lend him the cash. We were more than happy to, since he already
had a job where he was earning enough money to repay the debt, and the
equipment was easily worth quite a bit more than the loan. We made this loan, and the borrower chose an eighteen
month term. We charged a comfortable
14.9% interest and the deal was struck.
The borrower was very ambitious and his marketing savvy helped him repay
the loan ahead of schedule.
Our short term lending allowed him to create a business. Our money plus a reasonable profit was returned
quickly so we could award it to the next deserving borrower. Many lenders make fast, effective short term loans to responsible borrowers. Examples
include loans for unexpected bills, large but prudent purchases, loans to
businesses to temporarily add inventory or buy assets, home renovation or
remodel.
Long Term Loans
Long term loans allow us to have consistency and to recover
the expense of making the loan better than short term loans. If a loan is well made, why would you ever
want it to end? And the early stages of
the loan are rife with lucrative interest.
I've worked with many lenders who are also real estate
investors. When selling a property to a financially
capable and thoroughly vetted buyer, they carry back a second mortgage. (A "carryback", for anyone not
familiar with the term, is when someone buys a house but only pays for part of
it at the closing of the sale. The
seller agrees to take payments on the balance which is thereafter considered a
second mortgage.) This type of lending
is very popular with real estate investors and sometimes non-investors find
themselves playing the role of lender in order to get a house to close.
The loans typically run for ten to fifteen years and range from
$5,000 to $200,000. The interest rates
are a little lower than short term loans - somewhere in the 8% to 11%
range. Of the payments made in the first
year, typically 80% or more of the total cash received is profit. Long term loans can really help your portfolio grow in size because the majority of the original capital is still
invested but all the interest received can be readily made into new loans - significantly raising the amount of invested funds in the portfolio.
Long term loans require a deep assessment of the borrower
before we hand out our hard earned cash.
If they're going to enjoy the fruits of our labor for ten years or more,
we expect those fruits to multiply and ultimately be returned to us safely. Once we're confident our borrower knows the
nature of money and is prepared to make good on the commitment, we can watch
our investments grow substantially from the long, steady and profitable repayment
of the loan.
In addition to seller carryback financing, other popular longer-term
loans include: automotive loans, educational loans, financing business purchases,
and real estate mortgages. Some of the
more exotic lenders I've met have invested long-term in oil wells, wind farms, vacation
properties, and multitudes of fascinating business ventures. Whatever industry we know the best, there's
probably a way our money will help someone else so that we both profit.
A good blend of short and long-term loans can provide us
with a healthy rate of return, consistent cash flow, and opportunities to
reinvest funds in a variety of scenarios.
Being flexible with the length of loans we make, we open ourselves up to
greater opportunities to invest wisely.
More on Diversified Lending: Diversified by Industry
posted by Josh Whitman at
December 05, 2012
11 Comments:
"Once we're confident our borrower knows the nature of money and is prepared to make good on the commitment..."
It's to bad this wasn't true back during the Bush years, maybe our economy wouldn't have been so screwed up. Hopefully the big lenders have learned their lesson.
In the past you could get a payday loan or other kind of short-term loan, but it wasn't a very pleasant process. Usually payday lenders would not have.
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You are entitled to a degree of flexibility for reimbursement by most
loans for people on benefits lenders. Through a payment plan that will repay you in a position to the loan. This makes it much easier for you to repay your loans because you are not required to pay a lump sum.
It is no secret that there are lenders who offer bad credit holders have a hard time with credit conditions difficult and costly monthly interest. It's really helpful for you to get loans for people on benefit businesses go, as the company understands your situation. Experts pay for bad credit up this type of company. They ensure that the credit holder is immediately to the recovery of bad credit financial support can also be started.
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You are responsible for the loans for unemployed if you have previous breaches credit defaults in payment rightful members. Additional bankruptcy, county court judgments, debts, credit card or other financial impairment leads to more credit. Bad credit loans are for people who are offered by leading mortgage lenders. --- If you're fresh to the concept of bad credit loans then leans out credit ranking to understand. 500 minimum credit score means type of credit unemployed loans cool style. Reviews are differentiating provided by the different loans lenders between different borrowers.
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This could be classified as exposed financially. The person is hopelessly caught in a turn without actual output as their earning capacity remains the same day loans circle. The most disturbing part of this equation is that the company we are committed to helping us with our financial crisis will continue making money from our misery until the cycle can be broken.
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You can totally take payday loans for people on benefits through the Internet mode. You need to fill only one online form for the loan. Even if your loan application is approved, the loan amount is deposited into your account mentioned in less than 24 hours. These loans are granted on the basis of the amount of aid you receive social security department. You must prove that you earn a monthly or bi-weekly check from the government. The credit advantages are the criteria for the approval of the loan quickly.
Amount that can be used by payday loans for people on benefit varies from 100 to 1500, and this amount, you can pay bills or payments in various pending. You can use this to pay loans for medical bills, electricity bills, phone bills, your child's college fees, sudden travel expenses, grocery bills, credit card dues and so Suite. Although the use of the loan, you need to be careful, because that's available to receive a short term loan in the next amount of power. If someone did not have to pay back the amount of time, because then he / she must pay additional interest? So it is better that you repay the loan amount within the specified time of repayment.
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This saying is not really hand in hand with loans for bad credit at all, because they are completely legitimate to go. Legitimate loans for bad credit are very familiar to owners of bad credit now as the only resort in the hope that they can rely on when they have a kind of financial needs for the time to carry credit-poor, their credit history. You should also know, that legitimate loans for bad credit is not provided by someone, we assume that the non-moneylenders. Bad credit lenders are lenders; there is no need to distinguish between them, since they follow a different shape than the other way.
Legitimate loans for people with bad credit ens are made available from the lenders. In the current economic situation, many borrowers are falling for the problem of bad credit history. This is because they suffer great financial pain for which they do not repay in a position to their existing loans properly. It is not that they make mistakes, because they are willing to do so.
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3 month payday loans are the best option if you need urgent cash and your payday is not near. This need is usually something urgently and immediately something such as medical expenses or mortgage. Since there is no collateral involved, it is a type of unsecured loan. So, like all unsecured loans April (annual percentage rate) is slightly on the higher side. But it did not hinder the popularity of this type of loan. Moreover, no record ID credit for this type of payday loans for bad credit required, so that people with bad credit can also take advantage of these loans. The loan amount due to unsecured nature and high annual percentage rate is in the region of £ 500 to £ 1800's.
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The orientation of the unemployed loans had good news for people that need to be asked for a job or a guarantee for lenders available. Therefore, it is secured in two forms secured and unsecured. As already noted, that most lenders do not like to offer borrowers loans for unemployed, because the chances of returning the money is very less.
Given to consider all these important aspects, was
loans for unemployed with great care in the arena of loan that is taken up with conditions and nominal conditions, including the related, he or she must be a citizen of the United States: she or her age should be at least18 years: he or she is a current checking bank account that must for the transaction, and much more can be used to have.
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Applicants must have some basic information in the form of loan application only after they mention all the conditions of fast payday loans for bad credit. Only then are they able to get the funds according to their needs and ease of repayment. The lender is not interested in the bad credit borrowers have credit ratings as; Late payments, defaults, arrears, Cocks (country court judgments), IVA (voluntary agreements), outstanding and so on. The money is quickly into the hands of less than perfect credit holders. So go ahead and get the loan application filled with submission and approval.
The amount starts from £ 80 to £ 750 with the duration of the corresponding refund 14-30 days, because quick 3 month payday loans are only for the short period. Therefore, no collateral is required at all. Therefore, non-domestic and non-proprietary securities holders are Abele get the funds in the absence of security only. Therefore, take the fastest of these loans are free from all the tedious tasks help.
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3 month payday loans are useful when you just need to pay and on the same day to the cash without credit check. These loans are useful when you just need to pay and on the same day to the cash without credit check. Approval is fast cash same day no credit check.
These payday loans for bad credit are approved in a timely and on the same day to smaller cash, which can range from 100 to 1500 you the money is approved provided initially for two weeks from the date of the next payment payroll. You are entitled to repay the money to three months or earlier. But pay interest until you pay the loan in full the amount
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