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A Good Return on Investment is Everyone's Goal

“Should I also give serious consideration to the amount of risk?”

All Investing contains an element of Risk.  If you're looking for a “risk free” investment, you can't even find it in a U.S. government vehicle! Why?  Because often those investments offer a rate of return that does not keep up with the inflation rate.  Treasury bonds and other government investments are some of the safest around, yet, you're still taking a purchasing-power risk with their rate of return.
While there are no guarantees when investing in real estate, the fact that you hold a mortgage on the property provides the security to offer a solid return for a more limited amount of risk.

“How do I know you are trustworthy?”

Fortunately, no one has to take a “leap of faith” in this process!  Everything is transparent: You learn about the property you'll be loaning on in advance.  You are provided all the information about the property's value, comparable properties in the area, the proposed use of the loan proceeds, etc.  Only when you are comfortable with all the facts do you decide on investing.
You will know exactly which property you're money is invested in.  Compare that with buying a mutual fund, where an investment manager decides where the money goes, and you have only a vague idea about what type of investment your money is in.

“What if you don't stay current with my interest payments?”

This is the question that banks and mortgage lenders deal with every day.  If an owner cannot keep up with their payments, then your security as a mortgage note holder, is the right to foreclose on the property.  Since we strive to develop situations where the property is worth substantially more than any outstanding loans, there is typically more than enough equity in the property to cover the value of any debt if the property had to be sold.

Who should NOT consider private lending?

  1. You're looking for a “Home Run”.  Our goal is to obtain generous returns at a reasonable risk, not to develop some “get rich quick” scheme.
  2. You can't tolerate the idea of “risk”. As we explain here and elsewhere, your loan is secured by sufficient collateral in the property.  That, of course does not make it totally risk free.  Should a foreclosure be necessary, the good news is you could potentially receive more than your original investment with interest back; the bad news is you may have to wait through the sales process to receive it.
  3. You will require use of the money very soon.  If your child is going to attend college in the fall, and you need the cash at that time, then this is not your preferred investment.  You should be able to use this money as a long term loan and forget about it until the project is completed or refinanced.
  4. You have never invested before.  “First timers” are usually more concerned and jittery than most lenders.  Often, they should initially invest in things like mutual funds that offer a daily value printed in the newspaper, send you plenty of letters, and provide website information from the fund managers.  In time you may want to “upgrade” to the types of private lending opportunities that Domestic Funding LLC makes available for you.

Who should consider private lending?

  1. You are looking to diversify your portfolio.  If you are already involved in other types of investments, then private lending should be a consideration.  That's because having all your money invested in one type (mutual funds, for example) really means you have your “eggs in one basket”.  This is Risky.  Having some of that money spread around in different investment types may actually reduce your overall risk.
  2. You have already developed your primary investment needs.  This is money you can lend without the need to access it soon.  This will benefit you, because the longer your money can remain working for you, the higher returns you can typically generate.
  3. You're a calm investor type.  Let the “jittery and nervous investors” own stocks and jump to see what the news will report each night.  If you're happy with periodic updates on how your investment is performing, not only will you sleep easier, but your choices of investment opportunities can be much broader.

Feel free to explore all of the content that we have put together for you on this site.  If you are interested in receiving more information about becoming a private lender with Domestic Funding LLC, or if you just have additional questions, please call us to talk more about this opportunity, send us an email, print out one of the forms on this site to send us a fax, or simply complete one of the forms and click the submit button.  A representative of Domestic Funding LLC will get back to you shortly to discuss this process.  As always, we suggest that you get the advice of your attorney and/or tax advisor about any investment or lending that you are considering.
Thank you for your interest.