Private Money Lending
WHAT IS PRIVATE LENDING?
A private money loan is a loan that is given to a real estate investor, secured by real estate. Private money investors are given a first or second mortgage that secures their legal interest in the property and secures their investment. When we have isolated a home that is well under market value, we give our private lenders an opportunity to fund the purchase and rehab of the home. Through that process, the lender can yield extremely high interest rates – 4 or 5 times the rates you can get on bank CD’s and other traditional investment plans.
Essentially, private money lending is your opportunity to become the bank, reaping the profits just like a bank would. It’s a great way to generate cash flow and produce a predictable income stream - while at the same time, provide excellent security and safety for your principle investment. You can do what the banks have been doing for years…make a profitable return on investments backed by real estate. There is no other investment vehicle like it.
Through private money lending, you have the
opportunity to become the bank
Why Private Lending is So Compelling
Passive income (minimal time involved)
No dealing with tenants
No manual labor renovating properties
No dealing with unscrupulous contractors
Short-term use of lenders money
Sense of security that money will be coming back soon
Secure collateral position in marketable and liquid real estate
Borrowers do the HARD WORK of finding the collateral
Borrowers put THEIR MONEY into lender's collateral
Borrowers put THEIR TIME and LABOR into lender's collateral
Borrower takes majority of the risk
If lender must foreclose, lender makes even more money
Multiple loans can be made at one time
It is easy and clean work
Huge annual industry business loan volume
You make money while you are sleeping
It improves the golf game by allowing more play time
Profits can be tax free
It is PROFITABLE with no cap on earnings
Invest at Market Price
Returns Are Unknown
Real Estate Private Lending
Secured by Deed of Trust or Mortgage Deed
Collateral is Fully Insured
Collateralized Below Market Value
Returns Are Fixed and Agreed Upon Term
Common Ways Private Lenders Fund Deals
Cash held in most types of bank accounts can be accessed quickly and can fund your deals in minutes, instead of hours or days. Fees are generally minim al for wire transfers and cashier’s checks.
Home Equity Line of Credit
A home equity line of credit is a very powerful source of funding that many people have and don’t even think of. Unleveraged equity is dead money and it’s not making any interest. You can easily tap into that money. It’s a way to make sure you’re in first position when we’re ready to pull the trigger and buy a property.
Personal & Business Lines of Credit
Personal loans and “signature lines of credit” can be obtained from most banks or credit unions by anyone with good credit and a stable income.
More and more private money lenders are using their IRA funds to invest in real estate. A self-directed IRA is essentially the same as a traditional IRA, but allows you to purchase a broader range of investments, including real estate.
Liquidated Securities & Investments
Investments are a way to put your savings to work earning more money. However, if your stocks and investments have not performed as you had expected, it might be time to consider other investments. As you know, stocks can be liquidated as and when you wish. Sometimes you need to liquidate your investments because you need the money for something you want to purchase such as real estate.
WE PROTECT OUR LENDERS
Mortgages offer the banks solid, long-term, fixed returns. You can put yourself in the position of the bank by directing your investment capital, including retirement funds to well-secured real estate mortgages. Mortgages have ultimate safety because if default occurs, the bank can recover its investment as the first lien holder on the property.
Each property we acquire is put through a rigorous evaluation process in order to assess the profitability before the property is ever purchased. “lntegrity" is an essential part of our business, and we only make sound investment decisions. Also, for your protection, you are also provided these documents to secure your investment capital:
Promissory Note: This is your collateral for your investment capital
Deed of Trust/Mortgage: This is the document that is recorded with the county clerk and recorder to publicly secure your investment against the real property that we are providing as collateral
Hazard Insurance Policy: This is where you as the private lender would be listed as the “Mortgagee” for your protection in case of fire or natural disaster, etc.
We do pay for a title search as well as a title policy on the home just as we would in a typical transaction. For a rental investment with a long-term note, we always keep a valid hazard insurance policy on the property to protect against causalities. You’ll be named as a mortgagee and notified if the insurance was not kept current. In the event of any damage to the property, insurance distributions would be used to rebuild or repair the property, or used to repay you.
Investment Terms & Conditions
Minimum Investment - $40,000
Interest Rate – 10% on average
Payment Schedule – paid monthly on the 1st of the month
Mortgage Terms – 12 months (projects usually completed in 3 to 6 months)
Return of Principal and Interest – paid back at closing
1st or 2nd Lien position
Option to renew
All documents recorded