Troisky, Inc

Private Money Lenders also known as Hard Money Lenders are constantly evolving. With Traditional Banks, borrowers can borrow money for longer terms at much lower interest rates (usually 3 times less than borrowing Hard Money).  However, due to the recent economic disaster, banks are now Ultra conservative and for the most part, seem to only lend to people who have almost perfect credit and, ironically, don't need to borrow the money.  This unfortunate over tightening of credit has cause a major financial and credit crisis.  Our economy is suffering because Banks are refusing to play their roles to lend responsibly and strategically to investors and businesses that need the money to run and expand their operations and/or buy investment properties.

So Private Money Lenders are stepping up, now more than ever, to fill the much needed lending void.  However, playing in the Hard Money Loans arena should be reserved for the experienced investors not for the beginners or the faint of heart.  There are big risks and rewards so be very careful if you decide to borrow Hard Money to fund your investment deals. Make no mistake:  Hard Money Loans are very expensive but will serve their purpose when you find the right investment opportunity.

Remember:  If you cannot make a reasonable return, even after paying the high interest hard money, then it's NOT a good enough deal.  Do your homework!

Whatever your perspective is about Banks and Private Money Lenders, borrowers should be responsible and smart when taking on these short-term, high-interest, hard money loans.  The questions borrowers should always ask before committing themselves to these private money loans are:

1.  Can I afford to pay for the interest and eventually pay back the hard money loan in a reasonably short period of time?

2.  What am I borrowing the money for and how long do I plan to keep the money for?
3.  Will my investment be able to make a profit from the money borrowed to cover the debt and pay back the loan?  Or will the interest be too high that it will eat up all of my profits?

4.  If the Investment that I borrowed the money for does not go through like my initial projections, will I be able to give up the collateral to the Hard Money Lender without putting myself and my family in financial jeopardy?  
5.  Do I have  the resources and/or the income to afford to pay the monthly payments for the high interest?

6.  What is my Exit Strategy?

While banks are conventional sources of financing for real estate, investments, and other purposes, private money is offered by individuals or organizations that usually have non-traditional qualifying guidelines. There are much higher risks associated with private lending for both the lender and borrowers. But in exchange, there is traditionally less "red tape" and regulation.  Private money is usually very expensive. When there is a higher risk associated with a particular transaction it is common for a Private Money Lender to charge an interest rate 3-4 times above the going market rate that Banks would charge.

At Troisky, having been on both sides of the transaction, we understand both perspectives, as a Borrower and as a Hard Money Lender.  We hope to share our experiences so we can bring Private Money Lending to light and help clarify some issues in order for both sides to have a better understanding of what the other side is thinking.  We hope this will help Borrowers and Lenders put things into perspective and understand that they need to come together and work with each other so both sides will benefit.  An ideal loan transaction is when Lenders get paid their interest on time, and borrowers can afford the interest payments and still make a healthy profit to afford to pay back that debt or solve a situation that they are borrowing that money for.  Nobody really wins when the Borrowers can't afford to pay and the Lenders have to foreclose on the property.