FREQUENTLY ASKED QUESTIONS
Q: How does a private mortgage loan work?
A: A private mortgage loan works the same as a loan from the bank, but more quickly and efficiently. The best deals in the real estate business are lost due to the amount of time it takes banks to get the investor the money needed to buy a property. If an investor can offer cash in three days, through a private mortgage lender such as you, he has a better chance of securing an under-valued property than an investor who’s waiting on bank funds.
Q: How much money can I lend out?
A: As much or as little as you want. We’ve bought houses in all price ranges, from $6000 up to $340,000. Typically it’s best to have one lender per property so that one lender is secured through a first mortgage on a property. If you only have a little bit of money to start investing, I can set you up with other investors who are just starting out, and pool your money together. After a few smaller deals you should have enough funds available to lend without pooling with other investors.
Q: How much will I earn?
A: When you lend us money for property acquisition and rehab you’ll earn 12% interest on your investment. That beats out pretty much any investment opportunity out there. If you lend us $50,000 for 12 months, you’ll receive $6000 in interest. Are you getting that kind of return out of any of your other investments? If you invest the same amount of money, for the same length of time, in a bank CD you’ll earn less than 1/3 of that. If you invest it in mutual funds or stocks, who knows what may happen to that money. You may get very lucky and make 12%, or you may lose it all…with no recourse.
Q: Why would you pay 12% interest when you can go to a bank and pay less?
A: A lot of the properties we deal with are in disrepair and needing extensive work. There isn’t a single bank out there that will loan money on a property that’s uninhabitable. In order for real estate investors to buy and rehab properties, we must use a combination of personal funds and private mortgage lenders such as you.
Q: How is my investment secured?
A: Your investment will be secured in the following ways:
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Through a first mortgage on the property you choose to loan on. |
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Through equity by lending at a very low Loan to Value (LTV). You will never be lending out at more than 70% LTV (in most cases it’s at around 50-60%). If a property is determined by an appraiser to be worth $100,000 after repairs are made, you’ll never be lending out more than $70,000 to purchase and rehab the property. You will always be in a high equity position. |
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Through a notarized promissory note attached to the property, and recorded with the county by a third party title company. |
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Through hazard insurance taken out on the property listing you as the beneficiary. |
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Through a title insurance policy being taken out on the property. |
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By having a licensed appraiser appraise the property to determine its as-is, and after-repair value. |
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By having a quit-claim deed prepared by a third party title company deeding the property into your name, and held in escrow for the length of the loan. |
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By loaning your money in multiple short term loans you can keep an eye on the market, and lend out whenever you want (just remember, a buyers market, like the one we’re currently in, is very good for a savvy investor who knows how to “roll with the punches” and adjust his exit strategies. A sellers market is even better.) |
Q: How will I know when investment opportunities are available?
A: I keep a list of all of my private mortgage lenders. When an opportunity presents itself, I notify my investors with all of the details they need to make an informed decision. Like I said before though, time is of the essence. If I can make an offer of all cash in three days to the owner of a property, I can buy at a substantially reduced price. The private mortgage lenders that know a good deal when they see it, and are able to act on it immediately, will be the ones who are earning top dollar on their investments.
Q: Will I be able to view the property on my own to determine if it’s a good investment?
A: If you’re an out of town investor I can supply you with digital pictures of the property before, during, and after the rehab process. If you’re an in town investor, you’re more than welcome to come out and inspect the property if you like…I don’t suggest it though. Real estate investors are a whole different breed of people. We’re able to walk into a former crack house that was just raided by the police, and step over used needles, soiled clothes, and pet feces (if you’re lucky) and smell nothing but the money the house will generate after it’s repaired (true story…ask any successful investor out there. These are the houses that generate the best profits.). A lot of the time seeing these properties before rehab is a little scary, and a bit intimidating. When I contact you with an investment opportunity you’ll be given the, purchase price, an appraisal, a detailed bid for repairs, an after repair appraisal, and what my exit strategy will be. This should be more than enough to make a decision. If you’d still like to view the property, I’d be more than happy to meet you out there.
Q: Will I be contacted by other investors looking for money?
A: I will never give your information to anyone. Your contact info is mine, and mine alone, and will never be sold off to other real estate investors.
Q: Why should I trust my hard earned money with you?
A: I’m an experienced real estate investor, and I only invest in the Central Ohio area with which I’m very familiar. I’m not some guy who just stepped out of a “get rich quick” seminar or someone who has watched too much “Flip this House”. I have the resources needed to get a project done quickly (appraisers, inspectors, plumbers, electricians, contractors, lawyers, title companies, and understanding insurance agents (try getting an abandoned house insured sometime…nearly impossible). I’ve weathered both the sellers market, and the buyers market. I’m able to adapt quickly to fluctuations in the market by adjusting my exit strategies. I’m in this for the long haul and will fail quickly if I start screwing over the people I need the most…you.
Q: How do I get started?
A: To get started making some money together please Click Here.