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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 lien position 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 allow our private lenders 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 CDs 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 principal 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.

HOW THE PROCESS WORKS

The process is simple. We find an extremely undervalued property we want to purchase – and once you give us the green light, we borrow the funds from you to purchase and renovate the property. At closing, you receive a mortgage on the home along with other important documents. The next stage is the property renovation. Once the renovations are complete (typically 3-6 months depending on the size of the project), we’ll list and sell the property. When it’s time for closing, you’ll receive your principal plus interest payment. It’s just that simple! The goal is to keep turning that money for you and keep you making substantial profits so you keep coming back to us – building a long term mutually beneficial relationship.

Why Private Lending is So Compelling

  • Passive income (minimal time involved)
  • No tenants, no labor, no rehabs
  • Short-term use of lenders money
  • Security knowing the money will be liquid again 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
  • The borrower takes the majority of the risk
  • Multiple loans can be made at one time
  • Easy and simple efforts yielding $$
  • Profits can be tax-free
  • PROFITABLE INDUSTRY with no cap on future earnings

HOW PRIVATE MONEY HELPS DAC7

Our Benefits of Using Private Money

  • We can avoid banks, applications, approvals, etc.
  • We can buy at deeper discounts
  • Gives us a competitive advantage above the rest

Allows us to buy with cash – Cash is King

Private money lenders bring speed and efficiency to our transactions, and our leverage is far greater when we purchase using private cash funds. Many of the homes we are purchasing require quick sale within 10-14 days. A traditional bank requires 30-45 days to close a loan. Many traditional home sales fall out of a contract because of financing issues. Using quick cash as leverage allows us to negotiate a much lower purchase price and reduce our risk.

Being able to offer a fast closing with private funds motivates sellers to take our offer over the competition and entices them to take a much lower price than they would from a conventional buyer. Also, lending guidelines are continually changing and are requiring applications, approvals, junk fees, and strict investor guidelines. They also limit the number of investment properties that can be purchased by one company.

On a new home purchase requiring renovations, private lender funds will be allocated to the purchase price, renovations, carrying costs, cost to resell and a small buffer for unexpected expenses.

INVESTMENT TERMS & CONDITIONS

Minimum Investment: When working with private lenders, $50,000 is our minimum standard investment. When first investing with us, a lower initial investment amount may be agreed upon to ensure you’re confident when working with our company.
Mortgage Terms: The majority of our loans are set up on an 8-12 month note; however, it depends on the size of the project. If we are doing a teardown and rebuild, we will have to wait on the county inspectors for many approvals – thus causing delays. We account for all of those details upfront and will give you an estimated time frame for the return on your investment. Also, we do not pool funds – your funding will be tied to one piece of property secured by a deed of trust.
Payment Schedule: Typically, we pay one large lump sum at closing on a short-term note. This is much easier to manage for both of us, especially if we’re working out of a retirement account. On a longer note, we will pay monthly just like a typical mortgage.
1st or 2nd Lien Position: The Investor, as “mortgagor,” has the right of first lien holder and Power of Sale on the property. The 1st lien position is placed behind a senior mortgage. You are probably used to hearing the term first and second mortgage. The second mortgage is a junior lien because it’s in 2nd position. The senior lien or first mortgage must be paid before the 2nd lien.