Where Do We Get The Funds to Buy Houses?
::: Private Lenders :::
::: Private Lenders :::
We are professional buyers of homes throughout the South Florida and Treasure Coast area. Our company can offer a homeowner a fast, all cash sale when the price meets our buying criteria. Then we borrow the funds needed for the deal from private lenders... always leaving with a safety cushion of equity. Our private lenders get a higher interest rate on a note from us, secured by a 1st position lien against our property, In addition we have hazard insurance protection.
We currently offer private lenders 7% to 12% and they decide whether they want monthly income or have interest compound for a few years for compounding growth. The terms can range from 6 months to 10 years depending on the private lender's needs.
For every loan, the private lenders receive:
| When we pay cash for a house, we usually include private lenders instead of using our own funds or loans from banks. Since we get a high return on our own cash, we can offer our private lenders a higher yield when we use their money to fund new deals. Maximum loan to value is 80%. That means we will borrow maximum $160,000 on a $200,000 property. The money we borrow is secured by a 1st note and is the 1st position. Our private lender gets 8.00% interest. Monthly payments include principal and interest, or interest only, depending on the needs. Interest only payments keep 100% of principal working. Most loans have a balloon payment due in 1 to 7 years. Whatever term that works best for the property and the private lender. Sometimes we borrow offering a 2nd position mortgage lien. For example, on a house worth $200,000, if there is a first mortgage for $100,000, then we can offer our private lender a second mortgage of (up to) $60,000. In the case of a second position, we pay 11.00%. |
Let me illustrate how they enjoy bigger profits using an example of $10,000 invested for 36 months with compounded interest. First, a bank CD paying 3% will grow to $10,940 in 36 months for a gain of $940. Next, a real estate note paying 11% will grow to $13,890 after 36 months for a gain of $3,890. Now that’s over 410% more money on the same amount invested! What a difference!
- A Promissory Note
- A Mortgage lien against the property
- Added on to the hazard insurance as the mortgagee
- A copy of any appraisals or market analysis reports
- Lender’s title insurance
We pay all costs involved to close the transaction.
We never pool funds or co-mingle together. One private lender... one note and one deed of trust.
Funds in a retirement account (IRA), can be used to invest. The IRS requires the use of an approved 3rd party custodian, such as Entrustfl.com, to qualify for tax-deferred or tax-free gains.
This is a great way to not only grow your retirement accounts but also have control of what you invest in.
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Property Redeemers LLC |
