Investing in Hard Money
Hard money borrowers typically pay interest rates between 10% to 15% with 2-5 points as an origination fee. For example, a twelve month interest only balloon note with a rate of 11% and 3 points charged at origination provides the lender a 14.43% return, or even higher if the lender reinvests the interest payments. Comparing that to conventional investments, there is no comparison.
As of September 2019 Dow Jones has returned around 3.5% over the past 12 months, while Bank CD rates are just topping 2.5%. However, any potential investment must be evaluated not only by its potential return, but also by its associated risk. We manage our risk by maintaining an average LTV over the entirety of our portfolio of less than 50%. In other words, we have better than a 2 to 1 security as it relates to asset value over loan amount.
Local Real Estate Expertise
We Know This Area
For over 30 years, we have acquired, developed, managed and lent on real estate situated primarily throughout Virginia, Maryland, and D.C. Our experience in all facets of real estate coupled with our understanding of true market valuation gives Fulford Lending an edge over our competitors.
Hard money loans are secured by deeds of trust on real estate. The deed of trust allows a lender when all else fails to foreclose on the underlying property in order to move a non performing asset off their balance sheet. A hard money lender’s risk is minimized to the extent that due diligence regarding market valuation will significantly reduce and in most cases eliminate the risk associated with loss of principal and interest. Fulford’s real estate loan portfolio to date has overall LTV’s of under 50%. This equity cushion is what minimizes our risk. The old accounting adage of garbage in garbage out is the best way to encapsulate the need to value properties properly. At Fulford we do this right in order to achieve the best results possible.