We’ve all been on the highway heading out town when traffic slows for hours due to a wreck. Everyone tries not to look as they pass by, but the vast majority of folks just can’t seem to resist the temptation.
Just like a car wreck, there is a real estate wreck waiting to happen. There won’t be bodily injury, but anyone involved is likely to feel it in their wallet.
After the 2007 meltdown, a number of Wall Street folks came up with a brilliant idea to allow individual investors to lend to other investors. There were also a number of changes by the SEC that enabled small loans to be made that would not fall under traditional security disclosures/regulation. This created the perfect opening for what is known as peer-to-peer lending. There are a number of variations that have developed in this sector, but we’re focusing on the real estate arena.
This new lending is a unique financing model: investors pool their money to make a loan on a piece of real estate. This sounds great in theory: Small investors can invest in a number of transactions in various markets, theoretically diversifying their risk while getting a good return on their investment. So what’s the catch? How will this cause the next real estate wreck? What should you do now to protect your assets?
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).