Hi Terry, know you’re very busy! But what’s your advice on short-term Commercial Real Estate loans? WGN has Jordan Goodman on a lot, recommending them! They sound pretty good, BUT????? Are the safe for savings account money since CD reat are so low now? What’s your risk assessment for the average investor? What would you recommend!? Thanks! (I posted this on your Facebook page too!)
Terry Says: I will say this one last time. I have always had great respect for Jordan Goodman, but I think he is WRONG this time! These are illiquid pools of commercial mortgages — companies that presumably can’t get credit through traditional lending sources. The yields being offered to investors are not high enough to compensate for the risk. Yes, the “pools’ are diversified with different mortgages — but in a financial crisis they will ALL be difficult to liquidate — potentially causing losses for investors, or at the very least, delays in getting your money returned. The real people making money on these deals are the people who charge fees to the borrowers, and “skim” some of the yield in the form of management fees for putting these deals together and “managing” the investments. This is NOT for “chicken money” even though it’s so horrible that rates in safe investments are so low. Remember, it’s not the return ON your money, but the return OF your money that counts!