How hard is your money currently working for you? First, let us answer some of the questions you may have about making private loans. Then after reviewing this page, the next step is to complete our Private Money Lender Form.
Who borrows at high rates?
We do because we have learned that…
It’s not the cost of money that counts, but the availability.
We make it possible to acquire good deals because the funds were available from private lenders that would not be available from banks. If a Real Estate Investor can get good at locating good deals on houses, many times the bank wants to loan on the purchase price not the value of the house, thus penalizing him for being an astute Real Estate Investor. Having the money available will make or break the deal and paying a higher interest rate is irrelevant compared to…
The loss of thousands of dollars in profit if the money weren’t available.
What kind of loans are private mortgage loans?
Let’s clarify what kind of loan a private mortgage loan is. It is a loan that you make to a Real Estate Investor and in turn your loan is secured by the actual property that the Real Estate Investor purchases. That gives you security. We’re not talking about high loan-to-value loans the banks and savings and loans make on homes. We deal with very low loan-to-value (LTV) loans. By that, we mean no higher than 50 or 75% of the value of the property securing the loan. Our typical LTV is 60% to 68%. That gives you additional security. This means if a house appraises for $100,000, we could buy it for $60,000. That’s a 60% loan-to-value. It’s obvious why this is a much safer approach than most lending institutions take. The banks make loans at a 75% to 95%, or even 100% loan-to-value ratio. Banks just don’t have any cushion.
You, as a lender, won’t lend more than 50% to 75% LTV regardless. You’re making a safe loan. You should never make a loan without a 25-50% safety net. We don’t violate that rule, so you come out a winner.
Do I need a lot of money?
No! We have made loans as small as $25,000. The amount of the loan is determined by the borrower’s needs.
Who handles all of the details?
Lawyers and our professional team will handle every little detail. It’s our job to get you proper documentation and protect your interest. All of this costs you nothing. The borrower pays all costs. If you make a $25,000 loan, you send a check for $25,000 to the closing agent and you get a mortgage for $25,000.
How do I get paid?
We will set up your account. Just sit back and we will send you checks for your interest percentage agreed on your investment or you can let the money accrue and get paid a huge pay out of simple interest when we sell the property based on the number of days you had the money loaned out.
Is this a long-term investment?
We borrow money to buy and fix properties and then we eventually sell the property. You start earning interest the day we purchase the property and then your principle and accrued interest is paid to you when we sell the property. So the terms vary. But our business is to buy and sell property and typically we will get your money out working again within 30 days. It’s your money and it’s your choice how long you want to continue to earn this high rate of return.
What if I want to liquidate?
If you want out, it will take between thirty and sixty days. You really shouldn’t make mortgage loans if you feel you will liquidate shortly, but the option is always available. And there is no penalty for early withdrawal. Just call and we will handle all of the details.
Is this a mortgage pool?
No! You make the whole loan yourself. You get a lien against the property. You are the bank.
Is my loan really as secured as it sounds?
Remember that making loans is a business and should be treated like a business. That is why we have created a separate document called a disclosure statement to let you know exactly how the company operates, the risks and exactly how your money is secured.
We follow these common sense guidelines that we’ve talked about and if you set up a simple system and let the professionals implement the system, your loan portfolio can be hassle-free and produce staggering yields. Also remember, all costs are to be paid by the borrower…. not you!
What are my options if you don’t pay?
Actually, there are several options:
- Call us and we will send your money back.
- We could ask to restructure the note. For example, let’s say we are behind on payments to you. Sundog Real Estate can and would like to keep the house, but they can’t come up with enough money to bring you current in one lump sum. You could let us continue to make regular payments and make an extra payment on the arrears in addition, or you could simply add the arrears to the principal balance and extend the term of the loan. This means you would be collecting interest on interest for the entire remainder of the loan. There is almost always ways to work it out if both sides are willing to cooperate.
- Have Sundog Real Estate deed you the house. This is an opportunity for you to get a house at a greatly discounted price. When this happens, you can create a tremendous profit center by reselling the house.
- If left with no other choice, you should simply foreclose. Foreclosure isn’t the evil, time consuming, costly legal process that most people think it is. It’s as simple as sending your note to an attorney and saying “do it”. All you have to do then is sit back and wait. Nine times out of ten, before foreclosure is complete, someone will be calling your attorney’s office with a payoff letter, and your loan will get paid off. When this happens, you will collect all accrued interest, your principal balance, and all attorneys’ fees, court costs, and all other expenses you have incurred in connection with your loan.
If you end up with the house it doesn’t mean that you have to keep it. It can be sold immediately at a fair sale price and still produce a profit over and above your already high yield on your loan.
Now, we’re doing a lot of talk about default and maybe this is too much information than it was necessary, but we just wanted to make sure you had all the facts and your questions are answered. In our years of business we have never been late on a payment to a private lender.
What kind of documents will I receive?
Your closing package should contain the following:
- An original Promissory Note.
- A copy of the Mortgage. The original will be recorded and then sent to you.
- A fire insurance endorsement naming you as mortgagee.
Note: These documents are provided to you for security.
Private Money Lender Form
Still interested in being a private money lender? If this appeals to you, you can get started right now. While most people are complaining about the low rates they are getting on their GIC’s and other low paying investments, you could be receiving a consistent return on your investment over three times higher than normal AND it is secured by Real Estate.
The next step is to complete our Private Money Lender Form. Once we receive your completed form, we will contact you to discuss our different investment options.