Hi, Dear All,
One Finance broker offered me a 2nd Mortgage finance deal. The terms are: I need to lend out $50,000 for six months , The interest rate is 16.5% pa, after six months I will get back the capital. the solicitor will handle everything! Does it a good deal?
On face value it is a great deal…..the fineprint will tell the full story though. Make sure you have a solicitor check out the agreement and ensure it is not putting your capital at risk.
Some other thoughts.
1. Is the money guarenteed by anything ?
2. Is it a true second mortgage where you have an interest recorded in the property ?
3. Is the property purchase a realistic purchase where you will get monies back if the deal goes wrong ?
4. Do you know the individuals involved ?
5. Is the solicitor your solicitor or acting for the other party ?
Just a few thoughts that came to mind instantly but if all is well. Sounds like a reasonably good return on your money if you want to be a passive investor.
If it was my last $50K I would probably use it elsewhere because I know I could get greater than 16.5% return out there.
Hope this helps
Enjoy
AD [:0)]
(Andrew)
“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
Just think of how much money you could make if you used this money yourself. Eg if you used it as deposit on a property, a wrap maybe?
With this 2nd mortgage you would only make $4125 in 6 months. Do you have to pay any legals?
If you used the $50,000 as deposits on
– 2 wraps with a purchase price of around $100,000 how much would you make?
– 2 cheap buy and holds?
-one capital growth type property?
Thans Andrew & Terryw,
The money i lent out is guaranteed by a true 2nd mortgage & I also get indepentant valuer report, the LVR must be less 80%. I know it is a “fair good” deal, but not good enough. Andrew, Could you tell me where can i get grater than 16.5% return?
Thank you Terryw your idea to purchase two ip, but I live in Sydney Southern area, I can’t find any rasonable ip which market value below $330,000, Could you give me any furcher advise?
Regards
I friend on mine bought a 3 br house in Macquarie Fields (in Sydney) last year for 148,000. She just sold it for about $250,000. There are still cheap places in Sydney.