Frequently Asked Questions
Q: What will you pay?
A: I can do much better than your CD or money market account, probably several times the return you're getting. We'll conclude a return that works for you when we talk.
Q: Who collects payments?
A: No one. There will only be one, which is the principal plus accrued interest at the time I sell. That eliminates the hassle of payment collection on your part and helps me with cash flow. You simply wire the money to the attorney and forget it until you get a big check later, sort of like buying stocks.
Q: How long do you need the money or how quick can I get paid back?
A: How long would you like to get a fixed, high return on your money? I'd think the better question would be how long I can keep your money working. I normally set up the loans with a 5 year term, but most are paid back much sooner.
Q: What if I need it quicker?
A: I'll sell your note to another investor at its face value with a little notice. It will cost 5% of the balance at that time but I'd hope you wouldn't make the loan now if you think you'll need it back soon.
Q: How do I know the value won't decline more?
A: You don't, but you're starting with 35% equity at a current appraised value and you have me to make sure you get paid. How do you know your stocks will go up? My real estate isn't going anywhere and will always have value. We can't say that about stocks.
Q: What if something happens to you?
A: You'll have a recorded mortgage and can always foreclose and firesale the house and make money assuming my spouse doesn't sell the house and pay you off or simply deed it to you for what you lent. You're secure no matter what happens to me.
Q: Is this a mortgage pool?
A: No! You're the only one who'll own the note. You are in total control.
Q: Do I need a lot of money?
A: No, but to be in a first position we'll require from $35,000 to $125,000 depending on the deal. You tell me what you want to put out and I'll plug you into a deal that matches. Of course the more money available the easier that becomes. In addition, sometimes I borrow smaller amounts on a second mortgage which will require a minimum of $15,000.
Q: Why don't you borrow from the bank?
A: Banks require big down payments, excruciating qualifying, massive time delays and won't loan on houses needing repairs anyway. If I had to rely on banks I wouldn't be in business. I'd rather pay you and eliminate the hassle. This is your chance to become the bank with very little risk. I'm sure you understand.
Q: How can my IRA do this?
A: It's easy. I'll help you move it to an administrator who will allow you to invest your money into anything you want, not what they want. It costs nothing to transfer but will take about 10 days. Once it's done you'll alert me and I'll find you a deal. Now all your interest is tax free in a Roth and deferred in any other plan.
Q: Do you mind if my attorney gets involved?
A: That's fine with me. I'll explain it to him or her if you like or you can do the same or we can just have your attorney and mine hook up, whichever you prefer. Of course your attorney may become one of my lenders in the process.
Q: Can I look at the house before I approve the loan?
A: You can, but I'll do everything I can to discourage it because the house will likely need rehabbed, which is why I can buy it cheap enough for your 65% loan to cover all the costs. I'd rather you just let me do my job. Remember, you'll get a current appraisal showing work to be done and value once completed, title insurance and fire insurance and you'll lend 65% max. You're covered!
Q: What kind of documents should I receive?
A: Your closing package should contain the following:
First Name:Last Name:Phone:Fax:E-Mail Address:Shipping Address:Q: How quickly will I need the money after you call?
A: I'll expect you to wire the funds to the escrow account within 48 hours. We won't start the closing paperwork until they appear. If that's a problem at the time, we'll deal with it on a case by case basis and I'll try to accommodate. Frankly the quick response is for my benefit. You see, until the funds are provable, I'm never sure they are coming. I know you understand. Once your funds arrive, I'll know not to call other investors. I won't even request them until all due diligence is done and we're ready to close within a few days thereafter.
As you can see, making private loans should be safe and rewarding with no hassle and fear of declining stock value. Your return is the interest rate on your note and it won't change.
If you'd like to have the CD shipped to you, complete the Info On Our Contact Us Page!, and I'll be in touch to verify your information.
Paul Brennan
