Loans

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Private lending is the practice of borrowing money by a real estate investor to be used to purchase rental real estate directly from private lenders rather than a bank or other commercial lender. Private lenders tend to be ordinary people such as doctors, lawyers, accountants, business owners and possible retired people. Most private lenders are simply looking for better investment returns than they can typically get from bank CD’s, money markets or even bond investments. Over the past couple years these type investments have yielded a paltry 3% to 6% pretax rates. After taxes and inflation these investments have, in some cases, produced negative returns for their investors. This is why people are looking for better returns and private lending is the answer.

Private lenders are looking for returns in the 9% and 15% range and secured by local rental real estate. This kind of return will provide investors with positive investment return of almost 300% over CD’s and money markets. (more…)

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Finding a private money lender is an essential part of any real estate investor’s business. In the old days (pre-2006) you could easily get a mortgage or even hard money loan simply by showing up in the lenders office and filling out an application. If you could walk and talk you qualified for a loan.

But today in the post credit-bubble market those days are over. Getting money for your real estate investing business is much more difficult and likely to get even more difficult as the credit markets sort things out. So how do you get money for your real estate investment business? (more…)

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Getting private money lenders into your real estate investing business is critical to your success as the credit bubble makes getting traditional mortgages very difficult. Mortgage lenders are now requiring 700+ credit scores and documented sources of income. This can very hard for most real estate investors. Hard money lenders are also drying up as the credit bubble continues to take its toll on borrowers. So how do you get money for real estate deals?

The answer is private money lenders. But how do you get private money lenders?

We teach our students how to use simple marketing techniques to attract private lenders. Once you start to attract private lenders you can set up one-on-one meetings or group meetings where you can lay out the advantages and benefits of investing money with you. (more…)

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The financial events of the last several weeks have most peoples head spinning. If it is not Fannie and Freddie being bailed out, it is AIG, Wachovia, WAMU or Lehman failing and forcing the US Government to take them over or filing bankruptcy.

And now we have passed a $700 billion bailout package for the Wall Street banks. As a result of the credit crises, the real estate mortgage market is freezing up and banks are now requiring super human credit scores and multi-year employment history to get a mortgage for homeowners or real estate investors.

Real estate investors are really getting hit hard and have no shot at getting traditional mortgages and are being squeezed out of the mortgage market. (more…)

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In a typical private money lending transaction, you the real estate investor (borrower) will borrow from a private individual (private lender) and the transaction is documented by a Promissory Note and Mortgage.

Additionally, you will need to name your private lender on your property insurance. We also recommend you included a disclosure statement.

Promissory Note

One of the most important documents you will ever sign with a private lender is the actual Promissory Note that creates the loan obligation. (more…)

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..One the most frequent questions I get from students or newsletter subscribers relates to how can I raise money to buy real estate investments through private lending without getting in trouble with the SEC. This is not an easy question but certainly an important issue. Before I would answer this question, I always tell people that I am not an attorney and the advice I give is from my personal experiences and education and should not be considered legal advice.

Is borrowing money for real estate investments from a private lender considered to be issuing a “Security” as defined by the federal SEC or possible your state SEC? The federal SEC defines a “security” as a financial instrument such as stocks and bonds including such things as notes or evidences of indebtedness etc…. (more…)

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In today’s uncertain economic climate, financing a real estate venture through a private lender is considered a viable alternative to seeking a conventional mortgage through a commercial institution. With commercial lending institutions folding under the pressure of the Wall Street crunch, private lending is becoming the preferred alternative to financing real estate.

Obtaining financing from a private lender is beneficial to real estate investors who seek immediate financing to close a deal. This helps to avoid hassles that occur with financial documentation that is routinely required by conventional mortgage lenders. Private lending enables real estate investors to potentially close a deal much faster without having to endure the red tape of a conventional mortgage lender.

A real estate mortgage through a private lender is a very secure way to borrow due to the fact that this type of loan represents a significant percentage of the appraised property value with a lower loan-to-value ratio than a conventional mortgage lender. Additionally, the private lender is able to make a quick decision that would otherwise take longer with a conventional institution, where it must be approved by a group of loan decision makers. (more…)

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One of the most important documents you will ever sign with a private lender is the actual Note that creates the loan obligation. In a typical private lender transaction, you, the real estate investor (borrower), borrow money from a private individual (private lender) and that transaction is documented by a Note and Mortgage.

The Note lays out the terms and conditions under which the private lender is willing to lend you money and under which you are willing to borrow money. The Mortgage is the security document for the borrower’s performance under the Note and usually is secured by a piece of real estate you own or are about to purchase. (more…)

photo credit: TheTruthAbout…

Although conventional lending institutions have long been considered the popular choice for obtaining a property mortgage, the increasingly fast paced environment has prompted real estate investors to turn to private mortgage lenders to fund their real estate ventures. This is due in part to the snags and red tape in the convention mortgage lending process and the increased competition in the global real estate marketplace.

Connecting with private mortgage lender can sometimes be tricky due to private lenders being integrated with conventional lending institutions when it comes to the advertising industry. On flip side of the coin, some private lenders are also conservative about advertising due to probable issues with the SEC on the state and federal levels (more…)

photo credit: Derek Farr ( DetroitDerek )

Wow, has the real estate market changed in 2008! Real estate investors have been shut out of traditional mortgage money unless you have a 9000 credit score and a 50 year work history without missing one day of work (ok enough of the weak humor but you get the idea). Even hard money loans are HARD to get as they have all gone out business.

But just as the mortgage market is shunning the real estate investor – we are starting to see signs that the real estate marketing is starting to bottom and home prices have even gone up in some markets. (more…)