I’ve been looking into this type of investment as well….Specifically short term 1st Trust deeds (hard-money loans). The LTV ratio loaned out on these is in the 60% neighborhood, so the borrower has quite a bit of skin in the game and a huge motivation to perform.
The area that could pose the biggest problem is not getting an accurate appraisal, but as long as that base is covered I just don’t see a downside to it. Compared to the volatility of the stock market lately It looks like a viable alternative. I’m really close to pulling the trigger myself, so I’d like to hear other opinions too.
