Yeah this is a business being run. Just because passive capital is being used to fund it via collaterlized assets, does not mean it is the same as trading bonds or futures or investing in stocks. You lend money backed by underwriting of the risk and OP says if amount is over $15k the loan is collateralized. Not sure I see this as different in business as a cash lending against car title business.
Are you operating from your home or do you have an office somewhere people can go to get the bond and signatures needed to release the defendant.
Not to mention there are probably advertisement, office, hiring Mad Dog, etc. costs involved. Trading really is one of the lowest cost/easiest to enter business around...
I have a small office in my home that was partitioned off, it has a small security window with a document slot and waiting area. The cosigner comes here fills out all the contracts and forms, if real estate is being used as collateral I do deed search and we do a deed of trust on the property. Vehicles I can put liens on instantly the department of revenue gives us a login for instant vehicle title liens. I then meet them at the Jail and post the surety bond. I don't advertise anymore when I first started I did. Each county Jail has an approved list of bail agency's posted by the intake phones. Arresting officers refer me a lot and also attorneys.
I use no cash my cash stays in my portfolio that's the difference. I'm making money off of investments that are making money.
Yeah it sounds like a great business to be in. I think we are just saying that you are running a profitable business, it is not a trader business like trading futures or options. I can run my business with a line of credit backed by a personal guarantee which is supported by my personal investment holdings. So I can also use none of my own cash to run the business and my personal investment holdings are still making money. You are basically working with a line of credit with no borrowing cost with your personal investments as collateral. this is not an unusual way of doing business that is capital intensive. In fact it is why lines of credit were established for the most part. I don't understand the government allowing people to offer 15 times their collateral because it relies on the bail bondsment being a good business person in who they post bond for and what collateral they get. You may run a good business but if someone has 10 guys who skip bail/country because bail bondsman did poor background checks, they owe a ton of money to the court and go bust.
So if you ever spend money on recovering the bail money, the expenses to recover the bail that you incur like the expenses that you pay to bounty hunters to track down the defendant would be paid by the defendants? What if the defendant just turns around and murders you (God forbid, I wish you all the long life and good health) after they skip bail so that way they won't have to worry about paying nobody no nothing anymore? Is that a bona fide risk in bail bonds writing? I mean is your identity known to the criminals? Aren't you scared of that possibility? Do you have to invest in personal safety measures? I admit if you do have recourse in place should anything happen then it is an investment idea to think about if you have some spare cash lying around doing nothing. I don't really care about the ethics of it. I mean after you are providing money to help the guy get out of jail. If he doesn't like it, then don't do the crime and land in jail in the first place. One thing that I am wondering about is its possible competition that results in erosion of return. I mean this would be relatively easy money for anybody who's familiar with the criminal system and/or with lots of spare cash. Aren't you worried about more people getting into the bail bonds business from the criminal underworld and rich foreign nationals aka the Chinese and the Middle Easterners that would possibly crowd out the returns? Those are the two groups of people that I would think would be most interested in this type of investment given that bail bonds is legit with fast cash and they either already have personal protection measures in place or have money to provide it for themselves. And if more people get into this bail bonds business, wouldn't that possibly lower the returns? What if they decided to offer lower fees than 10% to the defendants?
Operating from home where criminals can just waltz in and out with cash? LOL I wouldn't operate from home if I become a bondsman. LOL
I'm single If I had a family I wouldn't work from home. I have a very secure home, a security system and barrier bars on doors. Somebody could still get in if they really wanted to, but it would take them awhile. It would give me enough time to get prepared to deliver lead poisoning. Also no cash is used in bonds, it's strictly surety bonds. It's just a piece of paper like a check that's only cashable by a court. So no cash is kept. They are paying 10 percent of face value for the bond to be depsosited with the Court. I have attached a picture of a surety bond that my friend uses, he bails through a surety company so he pays them 21 percent of all gross premiums. I self insure so my surety bonds are just a generic form kept at the jail that I sign and the Court keeps them until the case is finalized then it's destroyed.
If somebody skips court and we have to sue for the loss, it's very easy to get the judgment. They signed a contract so it's essentially a default judgment they also pay the Attorney fees. I'm only entitled to the loss incurred. So for instance somebody has a 20k bond but put up 50k in property. I can't just keep the 50k in property and not try to find them. I have a obligation to the Court to make an effort to locate. If that fails I then figure out the total loss, my time spent, bounty hunter fees etc. I then sale that property at a fair market value, any extra money is returned to the owner of the collateral. Before regulations and licensing criminals did run bonds in my State. It was like the wild west. They would keep all property and sale it for a huge return. They would also bail people out then revoke the bond and return them back to jail keeping the premium and any collateral. They would threaten defendant's with bond revocation if they didn't pay extra money. It was awful. The largest bondsman in my state in the late 80s was a convicted murderer, in the early 2000s the state passed a bail licensing reform bill requiring licensing with the department of insurance and training. You can have no felonys are any misdemeanors of moral turpitude ever in your life to qualify for licensing. Surety recovery agents aka bounty hunter also have to be licensed under the same standards. If you engage in the bond business at all without a state license it's a felony. If I go look for a skip and somebody is with me that's not licensed they would be arrested for a felony for engaging in bond recover unlicensed. The state is extremely strict on this. We are currently trying to make licensing standards even higher, we would like traning hours be increased to 200 hours and 25 hours if continuing education every 2 years, also an increase of net worth from 50k to 100k. A 2 year apprenticeship under a bail agent to get a sub agent license then 3 years as a sub agent to get full agent license. As to the 10 percent rate, some agents undercut it but they are taking on more risk. The lower your premuim the higher show up rate you need. Like I said we have guys who get in the business write bonds with no collateral backing and only charge 5 percent. But they eventually go out of business. They dont understand risk assesment. If you write solid bonds on low flight risk local people and collateralize the bond or have a cosigner with assets and good credit you'll do fine. The State is kicking around the idea of making 10 percent premuim mandatory on all bonds also, to stop some of this.