You Don't Have To Be A Bank To Lend
John C. Brandy, CFEd®
This just might be the simplest explanation of the reason behind my company's name: Open Mind Generations. That's for two reasons: one, the vast majority of people think you have to be a bank to lend money to someone else and charge interest for it, like they really do have a license to print money, and two, thinking in new ways is a hallmark of an individual, not his or her generation. We can all succeed and we will here.
In this article I'll give a brief overview of what lending really is and why you just might want to add it to your future.
It's Yet Another Way To Make Money
The only thing that's required in order to lend money is to actually have money to lend. No state or federal law makes it illegal to lend money.
Banks haven't been doing much lending for years now, which has given rise to so-called "social lending" websites.
Let's explore the major ways you can benefit from doing this, and how you can enhance that experience with our mentoring.
One of those ways - the low cost way is:
This is a lending site, and one of few private lending places in the world for people who don't already have a gigantic pile of money.
I have personally used this as a part of my future for many years with returns over 7%.
That's a great return on pure cash when the bank's paying less than 1% on a savings account.
It's a better return even when banks are paying well.
It works like this: let's say for example that you need $10,000 for a remodel. For whatever reason, you can't get a bank loan. What do you do? You can choose to become a borrower at Prosper. They evaluate you and assign a credit rating and interest rate that's likely to be of interest to both you and some investors.
But wait. What investor would take the risk of lending you $10,000 when you can't get it somewhere else? Don't get me started on the George Carlin skits or Neil Young songs about banks. They're funny, but the situation isn't. Enter Crowdfunding.
I am, and you should be, one of those investors. Here's a cool solution: I and 99 other people can all loan you $60. The result is that our risk is very minimal AND you get your $10,000. Now all you have to do is patiently turn things around and become the lender instead of the borrower.
Kiva and Lending Club
Kiva is just for the philanthropic ones among us as it is simply making microloans to people in developing countries like Kenya or Nicaragua, paying no interest but helping out people starting a business.
Lending Club, on the other hand, pays you interest and creates loans, very much like Prosper only down to the $25 level. Borrowers have to have at least a 640 credit score and not too much debt, which is a bit safer but also a bit more restrictive than Prosper. Your choice.
Virgin Money US
One of the pillars of "money wisdom" is to never loan money to family or friends. The reason is that you don't want a debt to mess up a good personal relationship.
Richard Branson's Virgin Money US formalizes the lending process for you so you don't have to worry about paperwork and you've got someone else to blame it on if you need to.
They handle loan docs, payment processing and even payment reminders.
OK, But What's The Bottom Line Here?
The bottom line is that you have to be involved. You have your goals. This is part of your savings toward those goals. I know what you need to do and I can nudge you in the right direction. I can warn you about whatever might befall you in the future, but I cannot make you do it if you don't want to.
So, if you want to get started with success, whether that comes to you through robo-advisors or something else we do here, like real estate, BitCoin, self-directed IRAs or crowdfunding sign up right here to get started.
Want to ask me a few questions one-on-one for free first? I totally get it. Click here to put that time on my calendar and we'll go from there.
Conclusion: You Want One Or More Of These
Because they will help you spread out your risk and diversify your returns. The SECRET to financial success is Multiple Income Streams, in other words money coming to you from many different places all at once. If something happens to any of them, your world doesn't change.
You can be in control. I'll understand what motivates you and meet that need while diversifying to manage your risk.
Together we paint a picture for you and your family and help you do things you didn't think you could do.
If you have any questions, feel free to reach out to me at email@example.com.
About the Author
John Brandy is a Certified Financial Educator (CFEd®) and a financial consultant who helps you achieve your retirement goals. He is an expert in investing using this platform. Contact John if you have any questions about using regular or retirement funds this way. He is happy to talk with you to discuss your investing goals.
Then there is "hard money". This became the default term used by mostly real estate developers and rehabbers, also known to most of us as the "fix and flip" crowd.
Banks will not make a mortgage loan on a house under construction or renovation, so this solution fills the need, but at a high rate. Hard Money lenders often charge 12% and 2 - 5 "points" and limit the loan term to about 6 months. This gets the borrowers through getting the house ready for resale "like new", after which they can transfer to a traditional mortgage until the property actually sells and closes.