“I have a few hundred thousand dollars sitting in my bank account. The money earns nothing because my bank pays the minimum interest rate. I am not interested in becoming a landlord. What do I do with the money? I want to invest safely while earning a good ROI. “
We often get these types of questions from our clients and readers. Private money lending is a popular concept in the REI world, but folks are often unfamiliar with this idea. Some people believe that it is too risky. This article addresses concerns surrounding this subject.
You must take huge risks if you want to be successful!
Investing your money does not always have to be a risky option. You must not throw away your hard-earned money. Put your funds in a reliable income generation system where you can earn passive income with certainty. Private money lending offers such opportunities.
What is Private Money Lending?
Private money loans are different from mortgage and credit card financing. Mortgage rates are around 3%-4% while the credit card offers unsecured loans. More often, banks have strict lending criteria, take too long and investors find it difficult to get money from a bank when they need it.
Unlike the banks, the private money comes from relatives, friends or other investors. If you are experienced, the private loan can be approved in less than 5 minutes. The investors title company will get the money, and he can start his work.
Places to acquire the loan: Cash, Home Equity Line of Credit, Retirement accounts, Liquidate securities and other investments. Using a Self Directed IRA is the best method to build and borrow your wealth from.
Security is the first benefit. When you give the loan, you become the first or second lien holder, if there are two, whichever is the highest loan gets first. That means, if the borrower cannot pay back your money, you can foreclose the property to get back your funds. At MJ Property Solutions, we buy under-valued real estate assets. We purchase homes at 30%-50% below the market value. That means, there is always room for you to make the profit.
The second advantage is that you earn high-interest rates. Most private lending contracts pay you an annual interest rate of 8%-10%. For complicated or low deals, the interest rate can be as high as 16%. The stock exchange market has historically paid 6% to its customers. CDs pay a minimal amount. Savings account do not provide a good ROI. Comparing these options, it is a wise choice to become a private money lender. It can be a lucrative option provided you invest with a successful firm and do your homework before giving the loan.
There are no hard & fixed rules. Experienced investors can negotiate a lower interest rate because they have established their reputation. You can rest assured that your money is in safe hands.
That depends on your goals and how you want to proceed further. Here are a few things to consider:
The answer to these questions will help you structure a private money deal. For further questions, please give us a call.
Consider you want to work with us. we show you a property that requires a renovation that will take 6 months from bought to sold. The purchase price is $100,000, the renovation and holding costs are $50,000 the selling price is $200,000. In this scenario it leaves a nice cushion of $50,000. If you were the one and only borrower you would have the first lien position making $7,500.00 in 6 months. Our company holds homeowners insurance with you named the entire deal, protecting your monies. It is secured by deed of trust or mortgage deed (lien holder). It is a tangible asset that you can see everyday if you wanted. We would provide you with a promissory note furthering your trust.
Right now, MJ Property Solutions is seeking to partner with private money lenders. If you are interested, please give us a call. We have an extensive process for finding valuable real estate properties. We buy distressed homes, renovate them, and sell them for a profit. Our firm now wants to connect with you so we can expand the business while making sure that your money earns you profit without trouble.