-
I am just so busy right now?
- I definitely
- understand that fact as we are very busy too. I would suggest you
- make time because the investment is one of the safest you will ever
- see and the rates of return are staggering. I will do my best to make
- the meeting very brief, but I would hate to see you miss out on this
- opportunity.
-
The
real estate market is too risky?
- I understand your
- feelings. However, the reason we are doing so well is because we are
- literally buying properties at 65 cents on the dollar or less. Even
- if the market dropped another 20% this year we would still have a
- huge equity cushion based on what we are paying for these properties.
- When we meet I will
- show you our buying formulas and I know you will agree that this
- might just be one of the safest things you can do with your money.
- The mere fact that we are acquiring properties at such a deep
- discount and that your money will be backed by real estate makes this
- one of the safest investments around. You compare that with the stock
- market where your money is not backed by anything.
- The best thing to do
- is to just take 30 minutes and I will be happy to walk you through
- the whole process. How does that sound?
-
What is
a private loan and how does private lending work?
- That is the #1
- question we always get. In fact, a private loan is a loan that is
- made to a real estate investor that is secured by real estate.
- Private Loan Investors are given a first or second mortgage that
- secures their legal interest in the property and secures their
- investment. We are not talking about high Loan-To-Value (LTV) ratios
- the banks and savings and loan institutions make on homes. We offer
- very low LTV ratios to our Private Lenders to increase security of
- the loan. Our standard LTV ratios are under 75% of the value of the
- property securing the loan and frequently as low as 60% to 68%. This
- means additional security on the investment.
- For example, if a
- property is valued at $100,000, our Private Lender will never have to
- loan more than $75,000 dollars on the property. That’s a 75%
- loan-to-value ratio. This is obvious a much safer approach from that
- taken by conventional lenders. These banks get into trouble because
- they make loans at an 85%, 90%, or even 100% loan-to-value ratio
- leaving them no equity for transfer costs, if they are ever forced
- into a position where they have to take back the collateral property.
- You, as a lender,
- will never lend more than 75% LTV. As a lender, it is in your best
- interest to minimize risk and maximize return and this is why a loan
- should never be made without a 25% safety net. We don’t violate
- this rule, because your security is at stake.
-
What
are my risks when I am lending money?
- Actually, there are
- several options but first and foremost, please be aware that
- “Integrity” is an essential part of our business and we only make
- sound investment decisions. One of our companies distinguishing
- features is that we have never been late on a payment to a private
- lender.
- Additionally, our
- company’s policy is to invest our own funds into every one of our
- projects because if we aren’t confident in our investment decisions
- why should you be? Likewise, if we ever lose the support of
- investors, we can no longer operate our business and our own
- investments would be at stake.
- However, to answer
- the question:
- Option 1:
- Restructure the Payment – We could restructure the payment schedule
- on the note. For example, let’s say we are behind on payments to
- you. Now our company can and would like to keep the house, but they
- can’t come up with enough money to bring you current in one lump
- sum. You could let us continue to make regular payments and make an
- extra payment on our arrearage in addition, or you could simply add
- the arrearage to the principal balance and extend the term of the
- loan. This means you would be collecting interest on interest for the
- entire remainder of the loan. There are always ways to work it out if
- both sides are willing.
- Option 2: We Deed
- You the Property – We could deed you the house. This is an
- opportunity for you to get a house at a greatly discounted price.
- When this happens, you can create tremendous profit by reselling the
- house because we never buy a house unless we are buying it at a steep
- discount.
- Option 3: You
- Foreclose on the Property – If left with no other choice, you can
- simply foreclose. Foreclosure isn’t as time consuming and costly of
- a process as most people think. It’s as simple as sending your note
- and mortgage to an attorney and saying ‘foreclose’.
- All you have to do
- then is sit back and wait. Nine times out of ten, before foreclosure
- is complete, someone will be calling your attorney’s office with a
- payoff letter, and your loan will get paid off. When this happens,
- you will collect all accrued interest, your principal balance, and
- all attorneys’ fees, court costs, and all other expenses you have
- incurred in connection with your loan.
- If you wind up with
- the house that doesn’t mean you have to keep it. It can be sold
- immediately at a fair sale price and still produce a profit over and
- above the already high yield on your loan.
- Now, we’ve talked
- extensively about default and maybe we’ve provided more information
- than is necessary, but we wanted to make sure you have all the facts
- and we’ve answered any potential questions.
-
What
happens if I have to foreclose on the property?
- The chances of this
- are miniscule; however it is a great question that must be addressed.
- First off, the foreclosure process isn’t as time consuming and
- costly of a process as most people think. It’s as simple as sending
- your note and mortgage to an attorney and saying ‘foreclose’.
- All you have to do
- then is sit back and wait. Nine times out of ten, before foreclosure
- is complete, someone will be calling your attorney’s office with a
- payoff letter, and your loan will get paid off. When this happens,
- you will collect all accrued interest, your principal balance, and
- all attorneys’ fees, court costs, and all other expenses you have
- incurred in connection with your loan.
- If you wind up with
- the house that doesn’t mean you have to keep it. It can be sold
- immediately at a fair sale price and still produce a profit over and
- above the already high yield on your loan.
- Now, we’ve talked
- extensively about default and maybe we’ve provided more information
- than is necessary, but we wanted to make sure you have all the facts
- and we’ve answered any potential questions.
-
What
legal instruments protect my loan? Or what documents do I receive?
- When you loan money
- you will always receive the following documents.
- 1) A copy of the
- mortgage. The original will be recorded on the land records and this
- must be paid off before the property is ever sold.
- 2) An original
- Promissory Note. This keeps me on the hook financially for the loan
- if something bad were to ever happen to me.
- 3) A hazard
- insurance endorsement naming you as mortgagee. This document protects
- you in case of a fire, water damage, etc.
- These documents
- provide you with the security you need and the return which you
- desire. You will receive the same documents every time you make a
- loan on a property. We make sure that all of our investors are
- protected on every transaction.
-
Who
Borrows at High Rates and Why?
- That is a great
- question (First Name). Investors like us do, because we have learned
- in our business that it’s not the cost of money that matters, but
- quick access to the funds so we can capitalize on opportunities.
- Our company acquires
- good deals in properties because we can act with lightning speed and
- can close with cash. Private loans give us this competitive advantage
- over other investors who take weeks to go through the bank approval
- process in order to purchase properties.
- Additionally, if a
- real estate investor locates a good deal on a property, many times
- the bank wants to loan on the purchase price not the value of the
- house, thus penalizing the investor for finding a great deal. Having
- access to money is generally a deciding factor in investing in real
- estate, so paying a higher interest rate is irrelevant when compared
- with the risk of losing the deal. Does that make sense to you?
-
What’s
the minimum investment?
- Our minimum
- investment is $50,000 dollars although we would prefer to be in the
- $100,000 dollar range. I would rather deal with one investor as
- opposed to 2 or 3 on one deal because it is a lot easier
- logistically. If you are looking to loan anything less than $50,000
- then you would most likely be put in a 2nd position note.
-
Who
handles all of the details?
- We do and in fact,
- that is our job! I try and make your life as easy as possible. It’s
- our job to get you proper documentation and protect your interest.
- All of this costs you nothing. I pay all the costs and work directly
- with the attorney/title company. If you make a $100,000 loan, you
- send a check for $100,000 to the closing attorney/title company and
- they will notify you that they received the wire and before releasing
- any funds you will have a note and mortgage sent back to you on the
- property you are lending your capital on.
-
Is this a long-term investment?
- Generally, your
- investment is tied to a specific project with a timeline ranging from
- 3 to 12 months. Most of our projects that we rehab take 5 to 7 months
- so we usually write the mortgage with a 9 month balloon. We also have
- longer term holds of one year and longer which is very advantageous
- to you, however the interest rate is a little lower because we keep
- you money in play for a much longer period of time. You can pick a
- term that suits your strategy. I would be more than happy to discuss
- both options with you.
-
What if I need to liquidate?
- If you want out, a 60 day written notice is required, because we will need to replace
- your funds with another investor’s money. You really shouldn’t
- make mortgage loans if you feel you will liquidate this shortly, but
- the option is always available and we have been able to liquidate in
- as little as two weeks in some scenarios. Also, unlike with a bank
- CD, there is no penalty for early withdrawal. Just call us, with 60
- days’ notice and we will handle all of the details.
-
Is my
investment really as safe as it sounds?
- Yes! We always
- follow these common sense guidelines that we’ve talked about. Your
- money will grow two, three, or even four times faster than your
- current investments and you maintain control. Each one of our
- properties that we acquire is put through a rigorous financial
- evaluation in order to evaluate the profitability before the property
- is ever purchased.
- Remember that making
- loans is a business and should be treated like a business. If you set
- up a simple system and let the professionals implement the system,
- your loan portfolio can be hassle free and produce staggering yields.
- The best part is
- that every loan you make is backed by a property unlike any stock
- market investments you may have made in the past.
-
How do
I use my IRA’s or pension plan?
- Making real estate
- loans is a widely accepted use for IRA’s and other Retirement
- Plans. Most people do not know that you can make private mortgage
- loans using the funds which are already in your IRA’s and other
- retirement plans. Think of the power of loaning out funds at high
- interest rates that are Tax free or Tax Deferred!
- In order for you to
- use retirement accounts for loans they must first be administered by
- a third party custodian. One custodian we commonly work with is
- Equity Trust Company. You can visit them on the web at
- www.trustetc.com or simply talk to us and we’ll help you with the
- setup of your account.
- After selecting your
- custodian, you simply send a transfer form to them and they’ll do
- all of the work for you. Once you’ve done that you are ready to
- make private mortgage loans.
- From there, you
- simply notify your custodian about the investment you are looking to
- make and send the check for the gross amount of the loan. Even
- better, we can do all the work for you and you just sign few
- documents, sit back, relax and wait for your money to grow tax free
- or deferred like grass on a spring morning.
-
Okay…I
am going to think about it?
- I understand
- _____________. Is there anything you are not clear on more
- specifically is there anything that is holding you back from going
- forward?
- Why don’t we do
- this…the next project that comes across my desk that I need a
- private lender for I will call you and take you to the property so we
- can run through the numbers. I will show you the comps and the
- financials so that you feel more comfortable. How does that sound?
Or
- Why don’t we do
- this. I just completed a project that we used another private lender
- on and I would love to take you to the property so we can run through
- the numbers. How does that sound?
-
Can I
do less money now and then increase it in the future?
- You most definitely
- can, because it is your money. We do have a minimum investment on all
- of our projects and if you are looking to loan less than the minimum
- then you will have to go into 2nd position. It is easier for me to deal with one lender as opposed to 2 or 3 on each project so yourmoney may not be active all the time.
- What is the most you
- would be willing to lend right now?
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