LENDERS
How does private money lending work?
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 are in need of a quick sale, usually within 10-14 days. A traditional bank requires 30-45 days to close a loan. Many traditional home sales fall out of contract because of financing issues. Using quick cash as leverage allows us to reduce our risk. Being able to offer a fast closing with private funds motivates sellers to take our offer over the competition and a conventional buyer. Also, lending guidelines are continually changing and are requiring applications, approvals, 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.
​
Your money is PROTECTED.
Traditional bank mortgages offer solid, long-term, fixed returns. You can put yourself in the position of the bank by directing your investment capital, including retirement funds to well-secured real estate mortgages. Mortgages have ultimate safety because if default occurs, the bank can recover its investment as the first lien holder on the property. Each property we acquire is put through a rigorous evaluation process in order to assess the profitability before the property is ever purchased. “Integrity” is an essential part of our business, and we only make sound investment decisions. Also, for your protection, you are provided these documents to secure your investment capital: promissory note, deed of trust/mortgage, hazard insurance policy.
WHY WORK WITH US?
You, as the private money lender can benefit greatly from investing your capital. A real estate mortgage/deed of trust provides you with security instruments you would not get with other investments. You also have added layers of protection because of how we buy, and because you have recourse available to you in case we were to default on the loan.
​
We currently pay 4-5 times what a typical bank CD is paying. Our rates will fluctuate very little depending on the purchase price and rehab involved. Private lending means you can relax while the money is in a truly safe place, working for you.
​
Our equity is built in the purchase of the home which creates instant equity at purchase. Because of our buying strategy, we are able to offer our buyers a fully renovated home at or below everything else in the neighborhood. We walk away from hundreds of “close” deals that do not meet our specific buying criteria, and simply won’t buy unless it makes sense for everyone involved.
​
FREQUENTLY ASKED QUESTIONS
What is private lending?
When we purchase a home, we give our lenders an opportunity to fund the purchase and rehab of the home. Lenders can also earn high interest rates - generally 4 or 5 times the rates you can get on bank CD’s and other traditional investment plans.
​
How is the money used?
The funds are used on a new home purchase requiring renovations. The cost will be allocated to the purchase price, renovations, carrying costs, costs to resell, and also a small buffer for unexpected expenses.
​
Why don't you get a traditional loan?
There are many reasons, but the primary reason is time and negotiation leverage. Many of the homes we are purchasing are in need of a quick sale within 10-14 days. A traditional bank requires 30-45 days to close a loan. Also, our leverage is far greater when we purchase using cash funds. Many traditional home sales fall out of contract because of financing issues, and this allows us to negotiate and reduce our risk. Lending guidelines are also continually changing. New requirements include applications, approvals, junk fees, and strict investor guidelines, they also limit the number of investment properties that can be purchased by one company.
​
Are you really helping sellers?
Absolutely. With our cash funding we can offer something very few buyers can. We are buying on their timeline in as little as 10-14 days. Knowing that we’re going to renovate the home and buying in "as-is" condition is a very important factor to most sellers of distressed properties. They also don't have to pay any additional fees.
​
What if the market gets worse and values go down?
Our goal is not to speculate three years down the road. Our goal is to purchase quickly and sell even faster. We estimate most of our projects to be renovated in 2-4 months and will be sold in 4-6 months. The market doesn't tend to shift that dramatically in a matter of months - it’s typically a longer process for an area to decline. Remember, we’re buying in strategic areas where inventory is already low and demand is high; this greatly minimizes our risk.
​
How long will my funds be held?
The majority of our loans are set up on an 8-12 month note, but 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 approvals. This will cause delays. But, we account for all of those details upfront and will give you an estimated timeframe for the return on your investment.
​
When will I receive payments?
Typically, we pay one large lump sum at a closing on a short-term note. On a longer note, we will pay monthly, just like a typical mortgage.
​
Who buys insurance, and what kind of insurance policy do you get on the home?
We buy the insurance. We pay for a title search and also a title policy on the home, just as we would in a typical transaction. For homes that require renovation, we purchase a builders risk policy (vacant dwelling policy). In case of any damage, insurance distributions would be used to rebuild or repair the property, or used to pay you off.
​
If you default on the loan, how do I acquire the property?
In this unlikely scenario, we would simply transfer ownership of the property to you, if possible. If for any reason we do not (or could not) transfer ownership, then you have all the legal rights of a secured lender. The best way to legally protect your interest in case of a default would be to hire an attorney. A legal representative could advise you if it makes sense to foreclose or seek ownership of the property to recoup your investment.