Is there a maximum I can invest?

As I continue to answer some frequently asked questions from the private lending FAQ, you may choose to answer today’s question significantly different than I have.

The question for today is: Is there a maximum I can invest?

My answer:

Since the overwhelming majority of the properties we buy are at or below the median price of houses in that market and we borrow only up to a reasonable loan to value on a property, there is a practical upper limit to how much you could invest on any one give property.

To put numbers to what I explained above, if the median price of housing as approximately $250,000 and we are borrowing 70% loan to value, the most you could expect to lend on that deal would be $175,000.

Of course, if you wanted to invest more than that you could lend on additional distinct and separate properties. Each deal though would be an independent and separate loan since we do not pool funds.

Until my next post,

James

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