When we pay cash for a house or commercial property, we usually include private lenders instead of using our own funds or bank loans. These loans are closed by our attorneys with traditional closing procedures.
Since we get a very high return on our own cash, we can offer our private lenders a high yield when we use their money to fund our new deals.
Maximum loan to value is 75%. That means we will borrow up to $75,000 on a $100,000 property. The money we borrow is secured by a 1st note and deed of trust (mortgage). Our investor gets 8 to 12% interest. Monthly payments include principal and interest, or interest only, depending on your desires.
Interest only payments keep 100% of your principal working for you. Most loans have a balloon payment due in 6 months to 1 year. The term is decided by you.
Sometimes we borrow offering a 2nd deed of trust. For example, if there is a first mortgage for $50,000, then we can offer our investor a second mortgage of (up to) $25,000 per our example above on a $100,000 property. In the case of a second position, we pay 12 to 15% interest.
All private lenders get:
• A Promissory Note
• A Deed of Trust recorded against the property
• Added on to the hazard insurance as the mortgagee
• A copy of any appraisals or market analysis reports
• Lender’s title insurance
We pay all costs involved to close the transaction. There is no cost to you as the investor.
Before you invest, we would first discuss how much of your capital you are looking to commit and for how long. We would then look for a deal that will meet your criteria. Once I locate the right property, I’ll call you, give you all the details and then you can decide whether to participate or not. There’s never any obligation until after you approve the deal.
We never co-mingle or pool funds together. One investor… one note and one deed of trust.
When you decide on a deal, you’ll send your funds directly to the closing attorney when we’re ready to close. We never accept your funds directly.
For some investors, we can offer to sell existing notes secured by real estate at a discount to yield 11-15%. These types of deals are less common but opportunities to buy discounted notes occur now and then. Discounted notes would require further explanation regarding risks.
Most properties we use as collateral will be located in or around the Greater Charlotte area.
Most of my private lenders currently include many of my family members, seasoned business contacts, and previous sellers I bought property from. Only recently have I opened this to others visiting our website. If you have funds in a retirement account (IRA), you can use them to invest. The IRS requires the use of an approved custodian to qualify for tax-deferred or tax-free gains. I will be glad to discuss with you further how we do this.