Thread: Lending to hard money lenders?

I've been really investing some time into furthering my real estate investment goals, and was recently talking to a very successful investor. He mentioned the following as another to show "knowledge is profitable."

He plays "matchmaker" between an interested investor and a hard money lender and receives a 2% "finders fee." He creates contacts with wealthy individuals who are looking for a high interest, short turnaround, and reasonable safe investments.

So basically, "Joe" wants to invest 1mil and so "I" put them in contact with "Mikes Hard Money Lending" who pays Joe 10% on a note for 1yr, and turns around and loans to "John" who borrows the 1mil at 15% for 1yr. I get a 2% finders fee from the 5% difference.


Anyone have insight on how to set something like this up? I have a couple friends who I'm looking to sell this idea to.

Thoughts and insight?

Personal Loans and Online Investing - Peer to Peer Lending - Prosper

Hard money lending is usually not structured how you describe. Its usually either setup as a note sale to the investor or as a fund with a broker making origination fees as the primary source of his compensation.

So the broker originates the loan between the capital investor and the real estate buyer. Note/Mortgage goes to the investor for PAR, and the broker charges the buyer ~2-5 origination points which comes out of the proceeds. There is no leveraged paper happening (which a loan is made to make a loan).

Your referral buddy is just splitting the origination fee with the broker. This is not "investing" in any sense, but rather just an introduction/referral fee. In some states, you may need to also be a licensed mortgage broker to take that fee.

Spencer: Thanks for clearing that up...didn't get all those details

Perhaps setting up an escrow company of some sort would help ?

2 Spencers
1 Thread

this is brokerage, not investment. and like spencer, i've never heard of a structure like that.

there's money to be made brokering commercial loans, though you'll need a license under an officer in most places. (on a really simple level) if you have contacts that need financing, then go make some cold calls to the lenders on scotsman guide, determine what they need for a package to underwrite, and send them the scenario.

charge your buyers 2% and ask the lender to cut it from escrow. use the matrix on scotsman guide to determine who does that to begin with.

Originally Posted by SpencerS

2 Spencers
1 Thread

Damn, your right! Thanks SpencerS for the link

My financial guy is also named Spencer... weird

Originally Posted by VII

My financial guy is also named Spencer... weird

Now that is some serious Twilight Zone shit!

Seriously though, I rarely see/meet other Spencers over like 10 years old.

Sorry for thread hijack.