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http://www.ocfprivatelending.com/
Ph: 888 756 0666
Private Lending vs. The Pros & Cons of CDs Investing.
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PRIVATE LENDING
WHAT IS PRIVATE LENDING?
As the national mortgage crisis and credit-bubble
continue
to unwind and traditional sources of real estate
financing
have dryed up real estate investors now rely on
and are
finding alternative sources of capital such as
private
lenders' real estate money, ergo; Private Lending.
ADVANTAGES OF PRIVATE LENDING
Advantage #1: High ROI and Control of Terms and
Conditions
One of the incredible advantages of a private real
estate money transaction is control of the terms
and conditions of your loan. For example, you can
offer a very short term loan of only 6 months at
several
times the highest rate paid by the banking
industry on
your deposits. The same applies if you offer a 2,
5 or 10
year term if you want to place your money in a
long term loan.
You can also control the conditions of the loan
such interest only payments, compounding,
principal
and interest payments, allowing or not allowing a
prepayment penalty for early prepayment.
Most normal mortgages and hard money loans require
a
1% to 10% prepayment penalty to pay a loan off
early.
With private lending transaction you control the
conditions
and can simply add a clause that allows or not an
early
prepayment without a penalty. That means a huge
advantage over conventional or hard money loans.
Advantage #2: Simple Paperwork
Have you ever gone to a closing on a traditional
mortgage loan and had to sign 2 inches of paper
work. Now image going to closing and only signing
two or three documents (yes that is not misprint).
Private real estate money deals are incredible
simple and the total paperwork is normally less
than 10 pages and includes two or three simple
documents. The documents included in a private
real estate money transaction are a mortgage (Deed
of Trust), an installment note and possible a
disclosure statement. The only other required
paper work is to name your lender on your property
insurance as you would in any normal loan
situation.
Advantage #3: Speed and Cash Flow
The ability to close a real estate deal in less
than two weeks is a huge advantage over having to
wait weeks or even months for a typical bank loan
approval. The importance of speed cannot be
overstated in a competitive market and quick cash
gives a big edge to real estate investors.
Imagine if you are the seller and someone comes to
you to buy your house and has a two or three month
escrow period before closing plus several
financing contingencies versus another investors
who will close in two weeks with no contingencies.
Not hard to tell which offer the seller will
accept. And the real power of this offer is the
seller may accept a lower price to close quickly
with no contingencies.
So not only do you get the deal from the other
investor, but you get it at a lower price. The
power of private real estate money is the ability
to close quickly and drive better deals terms to
any investors' advantage.
Advantage #4: Reduced Fees and Costs
Private real estate money is less costly than
mortgage loans or hard money loans. For example,
most hard money loans can ultimately have total
interest cost of 20% or greater by the time you
factor in all the fees, points, interest and other
costs. Even mortgage loans can be very costly with
fees and upfront points factored in and the high
interest rates most investors must pay versus home
owners. Loans from private real estate money
sources usually have no points and very few costs.
The total cost of most private loans is somewhere
in the 9% to 15% range with little upfront or
back-end fees.
Advantage #5: Flexibility
Private real estate money provides tremendous
flexibility for both you the lender, but also
for the borrower. The private lender can invest
small or large amounts - $5,000 to unlimited
amounts in deals to fund high-end luxury
residences,
larger apartments complexes or commercial property
purchases. You the lender can also work with the
investor
to structure a term and rate that fits the
borrower's needs.
Advantage #6: Protective Equity Cushion
Where on a cd deposit you lend the bank your money
at
full face value (100% LTV) - on a $100 cd you
"lend" the
bank the full $100 in exchange of their promise to
pay you
a low, paltry return, on a private lending
transaction you
lend the borrower much less than the value of his
collateral.
It's like if you were receiving $100 but were only
lending a
much lower amount on it. It's common private
lending practice
to lend at a 75% LTV. The lower the LTV % the
better.
http://www.ocfprivatelending.com/
Ph: 888 756 0666
highest cd returns
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CAN I BE A SMALL PRIVATE LENDER?by fdelach921 views
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