Investors
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So what is a Private Lender anyway? A Private Lender is any individual, trust or entity willing and able to make private real estate secured loans to someone engaged in the buying, selling and refinancing of real estate. What happens when you deposit your money with a bank? They give you a receipt (certificate) for your money and a promise to return your principal — plus interest — after a certain period of time. They then loan your money out, plus interest, to someone who agrees to pay a higher rate of interest than what you agreed to accept from the bank. You receive a low rate of interest because the bank provides guaranteed safety of your principal through the Federal Deposit Insurance Corporation (FDIC). ** In October 2008, the FDIC increased the amount of insurance it provides on eligible savings deposits from $100,000 to $250,000 per depositor through December 31, 2009. This means that consumer accounts — such as savings, CDs, and money market accounts — are insured for up to $250,000 through December 31, 2009. Suppose you agree to accept 3% on a certificate of deposit. The bank will turn around and loan your money back out at 6%-12% or more. They're making money — more than you are — on your money. But that's what you agreed to. You have the lowest risk and you get the lowest return. The bank takes more risk by loaning money for car loans, house and home equity loans, etc., and they get paid more. If you want to make more on your money, maybe YOU should consider doing what the banks are doing with YOUR money. After all, banks are in the business of making money and a large portion of that money is made through real estate loans. In a nut shell, as one of our private investors, you determine the rate of return, and the level of risk on your investments by giving us guidelines you're comfortable with. We can then offer your loan to our clients that meet your criteria, Loan amount, Credit Score, Loan to Value, Etc. as a new loan program. Is your money secure? How safe is it? The money you lend is always secured by a Deed of Trust (Trust Deed) against the property you have invested in. If you are uncomfortable with the loan amount or the real estate offered as security, you should not fund the loan. Safe is a relative term. Someone might consider money put under their mattress to be safe, because they know where it is and can access it any time. But is it really safe... Is it secure? Probably not. Only you can determine whether an investment is safe, secure and worth the risk for the return you are seeking. Generally speaking, the lower the risk the lower the return. What is a "Trust Deed"? A "trust deed" is a deed to the property which is given to an independent third party who both the borrower and lender instruct what to do in the event of the payoff of the property or a default. The trusted person ("Trustee") is, nowadays, virtually never a natural person, but a corporate trustee which literally holds the deed in trust. Upon payoff of the note, the trustee is instructed to record a document called a "Reconveyance" which literally "reconveys" the deed back to the borrower payoff of the loan. On the other hand, in the event of a default, the trustee is instructed to take the proper legal steps towards foreclosure of the property on behalf of the lender. How much money do I need? This is entirely dependant on your particular financial abilities. Consult qualified advisors before making any investment. An average Real Estate Investment typically ranges from between $50,000 to $100,000's per loan. We will contact you when a new loan matches your lending parameters to review the specifics. All I have is $10,000... Can I still make a real estate loan? If you have limited resources you should probably leave your money where it is. However, there is currently a high demand for smaller loan amounts of ($10,000 to $25,000) . These loans are generally 2nd's and Junior Liens made at a generally higher Loan To Value which increases risk but which in turn yield higher rates of return. For some investors, this might be a good way for you to get started as a private loan maker. We prefer dealing with individuals who want to diversify an existing financial portfolio by making private loans secured by real estate. Consult qualified advisors before making any investment. Can I make a larger loan if I want? Yes. It is not uncommon for some private lenders to loan $200,000 up to $500,000 or more, secured by multi-family or commercial property. In which states do you loan ? We are licensed to arrange Real Estate Loans exclusively in California. Can I use a traditional IRA or Roth IRA to fund loans? Yes. You can use an Individual Retirement Account (IRA) or Roth IRA to fund private real estate loans, provided your Third Party Administrator (TPA) is setup to allow this type of investment. If you have any questions regarding your plan or its administration, you should contact your IRA plan administrator. Once we originate a loan meeting your loan criteria we will contact you with the loan specifics. When it is time to close the loan, you notify your TPA where to wire the funds for the gross loan amount. There are no costs to you in making a loan, except your retirement plan administration costs. If you have chosen to receive monthly loan payments, some TPA’s may even arrange to collect monthly payments for you and deposit them into your account. It's that simple. Do I have to deposit my money with you? No. We NEVER touch your money. Once you agree to fund a loan, you will be contacted to send your funds directly to the escrow or title company or attorney who is responsible for preparing the proper documentation and/or loan closing. What does it cost me? There are NO expenses to you as a private lender. The borrower pays all costs. All loan origination services cost you nothing. Who will service my loan? A to Z Financial Services is a Full
Service Brokerage with the capacity to service your loan.
(Servicing Fee May Apply) How do I get paid? Interest accrues in the note until the property sells or is refinanced. You can choose to receive your payments monthly via direct deposit, or as otherwise agreed. When the note is paid off through either sale or refinance you will receive the remaining principle and accrued interest. You can or have it wired directly to your personal or to your retirement trust account. Is this a long-term investment? This is entirely up to you. We can structure loans to accommodate your needs, long or short term. Is this a mortgage pool? No. If you make a $100,000 real estate loan, you get a $100,000 note and deed of trust against the property you have loaned on. You alone will own the note. Essentially, you are the bank. How do I know my investment is protected? After loan closing you will receive the following documentation:
These documents provide evidence of your secured interest in real estate. California Department Of Real Estate RE Investment Brochure What
if I have another question? Contact us and we will do everything we can to answer your questions. |