Q & A For Real Estate Private Lenders

question

Q: Do I Need a Lot of Money to Invest?

No!
You can lend as little as or as much as you want. The amount of the loan and time period will factor into your return on investment.
In most cases, more opportunities and more favorable terms will be available to those with larger amounts to loan.

Q: Can I Send You A Check Today?

No!
You only send money in when we have a deal that fits your budget. You will wire the money directly to the title company or real estate attorney that is closing the loan.
If you are investing in an equity fund, we will provide the paperwork and instructions after completion of the qualified investor paper work.

Q: Who Handles All The Paperwork?

We will handle all paperwork and details of each transaction and pay any expenses. This is done by a real estate attorney or a title company to insure the liens are correctly perfected. Our goal is to ensure this entire process is hassle-free for you.

Q: When do I begin to earn interest.

For individual property lending you begin to earn interest on the full amount of your funds as soon as they are received.
For the equity fund investments, earnings are passed on the plan as specified in the documents provide for that investment.

Q: Isn’t This Too Risky?

Knives are risky, aren’t they? But only when you do not use them properly.
We do not make speculative investments; instead, we focus on making real estate investments and  bank-like loans on properties with equity.
The property is the security for the loan.
Make no mistake – investing has risks, but the trick is in how you choose your investments and their safety net (collateral). We use a 30% safety factor on each loan, that is to say the loan to value is 70/30 or better. The value of the property is 30% greater then the loan amount.
Banks consider first lien real estate notes as the safest kind of loan the bank can make. Retirement fund managers invest huge amounts in real estate because it is considered about the safest place they can put the money they know they will need in the future to pay retirement benefits from.
For example, your investment will most likely adhere to these rules:

  • It will not surpass the 70% Loan To Value
  • All properties have a mortgagee title insurance policy
  • All properties have an home owners insurance policy against loss.
  • The loan will be closed by professionals

Q: What Kind of Documents Will I Receive?

Typically for a specific property loan you will get:

  • An original promissory note specifying the terms agreed upon
  • A copy of the mortgage. (Deed of Trust )The original will be recorded and then mailed to you
  • A fire insurance endorsement naming you as mortgagee
  • A title insurance policy for the amount of your loan insuring you against any title defects

For Regulation 506C funds:

  • You get a Subscription agreement.
  • Copies of all the Investment paperwork.
  • An account set up in your name
  • Quarterly reports and statements of account with a check for any interest payments.

Q: How Do You Determine My Interest?

  • The Interest rate paid depends on the loan chosen. We pay from 7% to 12% interest.
  • Most loans are interest only for 5 years with a balloon payment at end of the 5th year.
  • Loans Paying 8% are 70% loan to value and are on houses valued at $80,000 and up. These may be rental houses are houses we sold and are carrying the note on. Amortized loans with longer terms are available.
  • Loans Paying 10% and 12% are available if you want to buy the note.
  • Loans Paying 12% are available on lower amounts (under $40,000) for short terms (6 years or less) on houses we sell priced under $60,000.

Q: How Do I Receive Payments?

You will receive your payments as we agree – monthly, or as a lump-sum (your loan amount plus interest).
The investment pool pays quarterly with the exception of IRA funds which are re-invested. Payments are made by check or direct deposit.

Q: How Long Will I Be Investing My Money?

The term of the investment will depend on the deal. The typical deal is 5 years or more.
It’s your money and it’s your choice. Short-term loans are typically interest only with full principal repayment at the time the loan is paid off.
Long-term loans may have amortizing payments (part principal and interest in each payment) and may have balloon payments, depending on your requirements and the investment.

Q: What If I Need My Money Now?

  • You should only invest an amount of money that you can comfortably leave in the investment for the term of the loan. Think in terms of five years or longer.
  • For example, your loan may be used to buy and fix a property, then sell it. Until it’s sold, your money will not be available, except interest payments.
  • Unlike in the money market, you cannot withdraw your investment at a moment’s notice.
  • Of course, you get a much higher return than you can get in the money market.
  • On the other hand, Promissory Notes secured by mortgages are purchased every day like stocks. We can assist you to sell the note if necessary.

Q: How Many Properties Do I Invest In?

If you choose to invest in individual properties instead of the investment pool, each investment will be treated separately as it comes.
Your limit is your choice. If you decide you like this form of investing, there’s nothing to stop you from making multiple investments.

Q: How Do I Setup My Retirement Accounts to Make Loans?

In order to use a retirement account for making loans, it must be administered by a “Third Party Administrator” (TPA) that allows real estate investments through a self-directed IRA.
Very few retirement account administrators, including those who do have self-directed plans, will allow you to make real estate investments because it does not fit their business model.
If you would like to get setup, please contact our office and we will provide you the names and numbers of TPA’s that specialize in this field.
Once your account is established, all you do is sign papers to direct your TPA to make the investment for you.
Some TPA’s will even collect the monthly payments for you and deposit them into your account. How that for is hassle-free?

Q: How Do I Get Started?

If you have any questions on how you can work with us as a Private Lender… just connect with us through our contact us page or REGISTER with the form below as a private lender for more information. We will get back to you in a timely manner.

Happy investing!  We want to hear from you so don’t hesitate to connect with us anytime.