Private Lending

Are you getting 8% or more yields from your:

CD's, Stocks, Savings Accounts, IRA's, Pension Plans and other investments?

If the answer is no, please pay very special attention because the following information could make you thousands of dollars in the coming years simply by increasing the yield on the same money that you're investing now.

I'd like to spend the next few minutes talking to you about a way you can control your investments and safely make them grow faster.  Yes, I know that it sounds too good to be true, but it isn't.  What I'm going to share with is very common in real estate circles and has been going on right under your nose in most every city in America.

Smart people have been utilizing this investment for years.  In fact...there have been entire companies built around this investment and those who do it properly have grown to huge proportions. This is a very safe investment that produces high yields while at the same time providing security and liquidity. While not this investment is not hard to understand, it does take about the same amount of effort on your part as it does to open a CD at your local bank, yet it gives YOU so much more control over your investments.

Can you really afford not to control your own investments?  Does it make sense for a bank or broker run your investments for you?  They would like for you to believe it does.

There is an alternative for you to consider.  That alternative is...

Private Lending

Private Lending is an incredible way to build wealth, or more importantly, maintain wealth you've already built that most people aren't aware exists. You can loan money, secured by a first or second mortgage that will not only give you safety you want but will also give you the higher yields we've discussed!

Let's discuss the pros and cons of loaning money secured by real estate.

First, let's clarify what kind of loans.  I'm not talking about high LTV (loan to value) loans the banks and savings and loans make.  What we are dealing with here are very low loan to value loans.  By that I mean no higher than 60% -70% of the value of the property securing the loan.  This means if a house appraises for $80,000 you wouldn't make a loan for more that $56,000.  That's a 70% LTV (loan to value).  It's obvious why this is a much safer approach than most lending institutions take.  Some lenders are in trouble because they make loans at an 85%, 90% or even 95% loan to value ratio.  They just don't have any cushion for default.  On the other hand, when you are dealing with a 70% maximum LTV (loan to value) there is so much equity above your loan that if you have to foreclose, the property could be sold not only for enough to cover your investment, but quite often at a huge profit.  So in other words,

If you are Real Estate oriented, this is just another avenue of income for you...
and if you aren't Real Estate oriented...There are plenty of investors and homeowners
that would love to have the property for 70% to 80% of the value if you took it back.

While the possibility of  default is always present, in reality when the loan is at such a low LTV (loan to value) ratio, default is not common.

Let me see if I can answer some of your questions you may have about making loans.

Is This A Mortgage Pool?  No!  We follow a strict one loan one investor policy. You make the whole loan yourself.  You get a lien against the property.  You are in total control.

Do I Need A Lot Of Money?  No!  We have been involved in transactions as small as $3,500.  The amount of loan is determined by each transaction.

Who Handles All Of The Details?  Unless you are highly skilled in real estate matters, you should leave that up to the professionals.  The loan can be closed at a local title company, and all the expenses can be passed on to the borrower and/or included in the loan.

Is This A Long Term Investment?  Not necessarily!  It can be any term you want.  You're the boss.  Usually we want a 5-year term or less, but some investors don't care if it stretches out to ten years or more.  You pick the term that suits your strategy for Investing / Retirement.  Some investors make interest only loans with a short-term balloon.  Some will amortize for 15 or 30 years and balloon in 5 years.  And some prefer longer terms.  It's your money and it's your choice.

What If I Want To Liquidate? Mortgages are purchased everyday like stocks.  If you want out, it will take some time to sell your note, but since these are very prudent loans, locating a buyer shouldn't be too difficult. You shouldn't make loans like this if you feel you will liquidate shortly, but the option is always available.  Just call, and we will handle all of the details.

Who Borrows At 8 % and higher?  All kinds of people.  Some with good credit, some with poor credit.  Some are owner occupants, some are investors.  These folks have learned...

It's not the cost of the Money that counts, but the Availability of it.

In cases of an owner occupant, they may not qualify under bank terms for any number of reasons (i.e. poor credit, time on their job, debt ratio...) In a lot of cases, they would qualify, but just don't want to deal with banks.  They would rather pay the higher rates in exchange for the ease of getting the money.

This also holds true for investors.  Having the funds available can make or break the deal.  When an investor finds a good deal, they usually need to close quickly, in a couple of weeks, which is simply not possible with banks.  Also, if the investor is good at locating the good deals, the banks want to penalize the investor for being a good bargain hunter.  If the investor has too many bank loans (usually 3-5) the bank considers the investor to be "high risk" and will not lend to them.  Or if they do, they will only loan up to 80% of the purchase price, leaving the investor with nothing to do the rehab work. 

The loss of thousands of dollars in profit if the Money weren't available.

Remember, you as the lender won't lend more than 60% to 70% LTV regardless.  You're making a safe loan in either case whether it is an investor or owner occupant.  You should never make a loan without a 30%-40% safety net.  If you don't violate that rule, you should always come out a winner.

What Are My Options If The Borrower Doesn't Pay?  Actually there are several options in event of default by the borrower.  Foreclosure is only one of them and usually the last on the list.

The first thing one could do if the borrower has a problem is temporarily restructure the note.  For example, let's say the borrower was out of work for three months and was behind on his payments for the previous two months.  Now they find a new job and would like to keep the house, but they can't come up with enough money to bring  the arrearage current. One could simply add the arrearage to the principle balance and extend the term of the loan.  There is almost always a way to work it out if both sides are willing.

Remember, it's up to you whether to even let the borrower reinstate or not.  Once they are in default you have the right to call the loan due or allow reinstatement.  It's your choice.  You don't have to take the payments unless you want to.  At this point you are in total control. 

What Kind of Documents Should I Receive?  Your closing package should contain the following:

Is My Investment Really As Safe As It Sounds?  Yes!  As long as you've followed the guidelines that we've talked about and apply common sense.  No, mortgages aren't as hands off as mutual funds, stocks or other kinds of nonparticipation investments, but in return for a little effort on your part, your money will grow two, three or even four times faster than your current investments and in addition, you maintain control.

If you follow some simple guidelines when making loans your risk will be minimal at best.  Briefly, these guidelines are:

Can I Use My IRA or Pension Plans?  Making real estate loans is an approved and widely accepted use of IRA's and Pension Plans.  Think of it, now you cannot only loan out money that has been unavailable for you to use, but you can make it grow rapidly...

Tax Deferred!

Since Uncle Sam isn't taking a bite of your profits until you draw out the money, or never if you have a Roth IRA, more money is left in the account to compound and grow.  The results are staggering.  You'll be receiving interest on interest on interest and..

It's All Legal And Approved By The IRS!

In order to use retirement accounts for loans a "Third Party Administrator" or TPA must administer them, and they must allow the account holder to self-direct. This means that the account holder tells the administrator with who, and for what, to invest their funds.  Typically, most administrators will offer products of their own which the account holder can choose from, and will not allow investments with anyone or in anything else    TPA's that allow for true self-direction are set up and approved to administer your loan activities.  This means you will probably have to transfer your plan to one of these TPA's, unless of course, your present administrator is set up to do that, but the likelihood of that being the case is not very high.

Equity Trust Company is the TPA that I use as well as many of my colleagues.  They specialize in real estate investing and can answer many of your questions regarding this topic of making loans with your IRA or Pension Plan.  Check out Equity Trust Co., A Leader in Self Directed IRAs  for more information.

REMEMBER, you can use any TPA of your choice, you'll just need to make sure that they will allow you to SELF-DIRECT, as discussed above. 

When your TPA is located, simply send the transfer form to them and they'll do all the work for you.  Once you've done that... 

You're Ready To Make Loans!

When you've selected a loan you simply notify your TPA where to send the check for the gross amount of the loan and you're in business.  There should be no costs to you except your plan administering costs.  

Most TPA's will even collect the monthly payment for you and deposit them into your account.

There are some restrictions when dealing with IRA's such as self dealing, but you're TPA will furnish you with all of the facts upon request.

If you have any questions regarding your plan or its administration, contact your Plan Administrator.

What if I don't have an IRA or Pension Plan?  The first thing you need to do is contact your financial advisor and see what options are available to you. Then, if you are interested in making loans and investing in Real Estate, notes, etc, you will need to select a TPA that allows true self direction as discussed above.

Well, we've covered a lot in the short time we've had together.  I hope I've enlightened you on the awesome power of Private Lending.  If it appeals to you, I can't think of a better time to get started than right now.  While most people are complaining about the low rates they are getting on their CD's and other low paying investments you could be receiving a bare minimum of 8% all the time...

Not Just When You Get A Hot Stock!

So what's it gong to be?  Are you going to continue to let other people control your money so you can get a return that barely keeps pace with inflation, or are you going to take control and make sure that when you get ready to retire, you can do what you want without worrying about money.

If you're ready to act now or if you have some questions, you can

Click Here to Email Us Right Now

Call us right now! 505-474-5621

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