Is private lending really a safe investment?

Here is an extremely important question to address for your potential private money lenders. It is part of the private lending FAQs that I put together to address questions about our private lending program.

The question is: Is private lending really a safe investment?

Here is my answer:

There is risk with every investment from Certificates of Deposit to Stocks and including Private Lending.

There are real risks with private lending that we do insure against. As an example, if there was a fire (or other natural disaster covered by insurance) and the property was destroyed, we do purchase insurance for that.

Personally, I feel that lending money secured by real estate that is worth more than the loan itself is a safe investment since you could sell the property (like a bank would do with security on their investment). I feel that the lower the amount of the loan compared to the value of the property, the better secured the loan is and the safer it is as an investment.

As with everything in life, there is risk of the economic world completely falling apart and the value of real estate going to zero. I do not feel that it is likely.

Until my next post,

James

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