Becoming a loan shark may sound like a terrible thing to some people, but it is essentially the same as being a hard money lender. The only difference is the name, which many people have come to associate with negative connotations and a bad reputation. The reality is that if you are an investor, being a loan shark can be a great way to make a profit if you are willing to deal with the risk involved. As this type of lender, you’ll have to deal with distressed borrowers and investments every day.
While many people assume that these lenders take advantage of the less fortunate, it is simply a matter of investing to find people in need and help them while making a profit. You don’t necessarily want to be known as a loan shark per se, because you can get in trouble for not following the lending laws as they are laid out. Although there is no legal definition for being a predatory lender, as most such lenders are called today, there is an idea that this type of lender will carefully circumvent the laws to keep people in debt to them. The most time possible.
This may sound like a great way to make a profit, but becoming this type of lender isn’t all it’s cracked up to be. You can actually get into hard money lending to help people and make a profit without charging excessive fees or interest or barely meeting the requirements of the law. Because you are dealing with people who are in stressful situations, there will be a much higher risk of default on the investments you make when lending money to people.
You have to be prepared for the pitfalls of being a loan shark or big money lender, and do the best you can without taking advantage of people to an extreme degree. With a good reputation, you can easily work with local lenders to attract people to your office when other lenders deny them the loans they need. However, if he is known as a loan shark who preys on desperate people, his investments are likely to be worthless and become more trouble than they are worth. When it comes to hard money loans, remember that you have laws to follow and a reputation to uphold.