Trust Deed Investments
Trust deed investments should be an important part of any investor’s portfolio. Whether a corporation, pension plan or private individual, trust deeds offer a unique combination of superior returns, outstanding security and investor convenience. What do trust deed investments provide for your investment portfolio? Read through our reasoning below:
All knowledgeable investors are aware of the incredibly low rates being offered by financial institutions on certificates of deposit and money market funds. Even investors with substantial assets can only do marginally better and must diversify or risk losing value to inflation. The constantly changing stock market can be even less appealing.
For the investor who desires higher fixed income returns, investing in First Trust Deeds can deliver interest rates between 8 and 12 percent. These rates are fixed and can be anticipated for the duration of the loan. Payments are made monthly and the investor receives an itemized statement for each of his loans.
As a prudent investor, you should always associate higher returns with higher risk. Investing in First Trust Deeds, as with other investment vehicles, are no different. They do come with the possibility of default. However, this risk is significantly mitigated by two factors. First, each loan is secured by a promissory note payable to you on a single investment property. Secondly, the borrowers are often real estate veterans who typically have high credit scores with a proven track record of success and reliability.
Nevertheless, defaults do occur. In this event you, as lender, may obtain sole possession of the property and either keep it for a rental or sell it. This fact is significant because usually First Trust Deeds are written at significantly discounted loan to value ratio, typically 60 percent or less. Investors should feel comfortable that in the event of default and foreclosure they will receive title to a property potentially with a value greater than the loan amount.
As protection to the lender all procedures undertaken by banks to ensure the security of their loans are also required when Private Trust Deed Investments are executed. Appraisals and title searches are performed. Hazard insurance is a requirement, and all transfers of monies are handled by a licensed and bonded escrow company.
An investor may choose to perform and all activities necessary to generate a real estate loan himself. For the uninitiated, this can be a difficult. Private Money Brokers that negotiate and administer their Trust Deed Notes add one more dimension to these investment vehicles, convenience.
They have the knowledge and expertise to oversee and expedite the process and to keep all aspects of the loan in compliance with regulators. They relieve the investor of the paperwork headache. All components of the loan process, from origination to servicing, can be handled or outsourced by the Broker. California Private Money Lenders will continue to monitor the loans and provide expert advice throughout the life of the loan.
The best way to understand how we can potentially help you with your trust deed investments to give us a call. We can discuss your specific investment portfolio and investment goals and offer personalized service and pricing. Call us today at 707-315-1119, or fill out our borrower form or contact form to learn more about our California private money loans and what California Private Money Lenders can do for you.
When Your Loan Doesn’t Fit the Equation
Real estate investors with multiple properties can face an uphill battle when looking to obtain financing for their investment properties. While income, credit and the ability to repay should be the determining factors, many funding sources cap the number of properties an investor can own. This can make obtaining financing for new properties, or refinancing existing properties, difficult at best.
Why You Need A Private Money Lender
We specialize in alternative financing, and our programs do not cap the number of properties that can be owned by a single investor. We can help obtain financing for most property types here in California, from residential investment property to multi-family property, commercial, mixed use, even industrial property and land. In addition, we have programs that can compete on rate.
When people think about alternative financing, private money or hard money lenders they often associate that with rates at or above 12%. We have a number of programs to fit the needs of qualified investors, even those who own many properties, that have competitively priced rates in the single digits. These programs are not limited to individuals with excellent credit, even with credit challenges we can often times offer highly aggressive pricing.
Many Factors Are Taken In Account
Our pricing takes into account a number of factors. Credit is one factor, but other compensating factors can overcome even the most challenged credit. Loan to value is another factor; with the right loan to value we can often times offer pricing that is as good or very similar to what we could offer someone with excellent credit.
Most of our funding is private, meaning we do not have rigid guidelines. Rather we are able to offer terms based on a make-sense type of underwriting. If the risk is lower, whether through income, assets, credit, loan to value or other factors that can be reflected in the pricing we are able to secure for your transaction. Every transaction is different and unique.
The best way to understand how we can potentially help is to give us a call. We can discuss your specific transaction and offer personalized service and pricing. Call us today at 707-315-1119, or fill out our borrower form or contact form to learn more about our California private money loans and what California Private Money Lenders can do for you.
What To Know About Private Lenders
Private lenders have been around for, well, forever: as the saying goes, lending money is the second-oldest profession. In advanced economies today, private or “hard money” loans are used by real estate investors ranging from professional renovation investors with excellent performance records to desperate last-resort borrowers with terrible credit histories.
While there remain some back-alley loan sharks around doing shady deals with desperate investors who aren’t responsible enough to borrow from anyone else, most hard money lenders are open, ethical businessmen and women with real estate acumen and extra cash to invest. There are even some formal banking institutions who engage in hard money lending.
Here are some cold, hard facts about the hard money industry to help you determine if hard money is the right money for you.
Hard Money Lender & Loan Facts
Fact #1: Hard money deals are often sought after for their quick turnaround (usually within 7-14 days to process). Any investor interested in flipping a property knows that time is of the essence and needs to have funding available sooner rather than later.
Fact #2: One way in which hard money lenders differ from more conventional lenders is in the fact that many hard money lenders tend to be local and more hands on in terms of wanting to view the property before lending money on the deals. Hard money lenders want to get that up-close-and-personal look and feel for a property before making a decision to lend on a property.
Fact #3: Hard money loans are generally much more expensive overall than conventional loans for both the interest required on them as well as points the buyer is expected to pay on them. Generally speaking, investors seeking hard money can expect to pay anywhere from 10 to 20 percent interest and get hit with as much as eight points with some lenders in some states.
Fact #4: Hard money loans are most often sought by investors doing short term deals rather longer term deals. Most hard money lenders will lend from periods of six months up to a few years.
Fact #5: While the red tape is certainly less and the turnaround time is much faster, more hard money lenders are taking a closer look at borrowers’ experience and credit history. After the real estate crash of the late ’00s, many lenders were triply burned, as borrowers defaulted, but foreclosures were slowed to a crawl for political reasons, and values had crashed. So while ten years ago lenders were more open to lending money as long as there was sufficient equity, today they tend to be more conservative and screen out rotten-apple borrowers more thoroughly.
Fact #6: Most private lenders require borrowers to use a specific appraiser who the lender knows and trusts, who will not be swayed by the investor’s pleas for padding the value.
Fact #7: Most hard money loans are structured very similarly to balloon payments with due dates usually spread over no more than one to two years after the loan is issued.
Fix & Flip is Simple But Not Always Easy
Investing in a run-down, abandoned home and fixing it up so that it can be sold for a profit is a popular way to get involved in the real estate industry. There are plenty of television shows that make it seem like a fast, easy way to make big money. While profits can certainly be made, you first should make the time and money investment to get there. Unless you have a large amount of cash lying around, you will most likely have to obtain a loan for the purchase and rehab. Here are some things you need to know before getting your first fix and flip loan.
You Still Need Cash
In the majority of cases, you won’t be able to finance 100 percent of the sales price and the cost of renovations. You’ll likely need a substantial amount of cash in order to make the deal attractive to your lender. This is true whether you’re applying for a traditional loan, or if you’re seeking a loan from a hard-money lender. A good rule of thumb is to have at least 20 percent of the amount you expect to need in capital reserves before you go to a lender. Remember, the more cash you have on hand, the lower the loan amount and fees will be.
It’s Not Always Easy
If you have less than perfect credit, and you’re new to the fix and flip world, you’re likely going to run into roadblocks along the way. Traditional mortgage lenders, banks and credit unions view these types of investments as risky, and therefore avoid them. Loans of this nature also take a great deal of time to finalize, which could mean losing the opportunity and having to start over. Hard-money lenders, on the other hand, aren’t as concerned with credit scores as they are with the potential the borrower has to complete the project and pay back the loan. They are more likely to release funds quickly, even to a new borrower, thus making the process faster and easier.
There Is Risk Involved
Even if you do thorough market research, investing in real estate is a risky business. There will never be a guarantee that your property will sell, especially in a narrow time-frame. As with any other investment, you should be prepared for the possibility of losing money on a fix and flip deal. You can mitigate some of the risk by seeking the advice of others that are successful in the business. Hard-money lenders are generally very experienced and willing to assist borrowers, unlike their traditional loan counterparts. Just keep in mind that no matter the outcome, you are responsible for repaying the loan in its entirety within the specified terms.
As a house flipper, getting a hard money loan is a viable option. If the loan to value ratio is high, give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of hard money loan specialists will be in touch promptly to answer your questions,
Bank Lending vs Hard Money Loans
While bank lending can still be challenging to source, hard money loans are relatively easy to find. The challenge comes in finding a good hard money lender that will offer you fast execution, competitive rates and ongoing service. Those three qualities separate the market’s best alternative financing sources from others.
Once you know where to look, hard money lenders are all over the market. A simple Internet search can turn up more lenders that you’d ever be able to do business with. Talking with a real estate agent or with a mortgage broker that is experienced in the investment real estate market can help you to narrow down the list. Attorneys, 1031 exchange qualified intermediaries and other people that are active in the market can also make recommendations.
What To Look for In a Hard Money Lender
When you find a prospect to provide you with hard money loans, here are a few things that you can look for:
1.State licensure. Whether or not a lender technically needs to hold state or national licensure, knowing that he went through this extra step is a sign that he’s serious about the business.
2.Flexible lending terms. The benefit of taking out hard money loans is that you can tailor the transaction to your needs, and the right lender will be able to work with you. This doesn’t mean that the lender will offer rates that are comparable to what you’d get at a bank, if you could find a bank to lend to you. What it means is that you’ll get competitive rates and underwriting that make it possible for you to do profitable leveraged deals.
3.Fast turnaround times. Private lenders should be able to pre-qualify you to offer you a proof of funds letter and should be able to close a loan in no more than three weeks. This is fast enough to let you compete with all-cash buyers but also leaves enough time for you to know that your lender is doing appropriate due diligence.
4.Membership in appropriate industry associations. A lender that is a member of the American Association of Private Lenders, for instance, has invested in his business and, even more importantly, has signed on to the Code of Ethics that protects you as the borrower.
5.Industry experience. Hard money loans from lenders that know investment real estate frequently come with help from experienced partners. They can also be easier to close, since your lender understands your needs.
California Private Money Lenders is your go-to source for private money loans in Sonoma County and Northern California. Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.
Finding a Great Fix & Flip Hard Money Lender
Fix and flip investing is part art form and part business venture. As a real estate investor, you know the importance of doing your homework when choosing a fix and flip property to rehab for profit. You have built relationships with realtors, property inspectors, contractors, and others in related industries to maximize your chances of success. You understand the proper way to figure appropriate ARVs for each property you consider. And you have a real eye for finding those diamond in the rough properties that others overlook when it comes to property searching.
But all these skills are of little benefit if you cannot secure the right financing at the right time. So, the question becomes how to find the right hard money lenders for your REI team. Distilling the selection process down to these four basic points will do much to ensure your success with finding the proper hard money lenders for your situation.
Due to the nature of fix and flip investing, quick turn around time for funds availability is a must. Knowing that your lender is ready and able to immediately fund your offer gives you the leverage you need to negotiate effectively with the seller. The reality of having readily available funds is a large incentive for sellers to accept your offer quickly.
Reasonable Terms and Finance Rates:
What percentage of ARV will your lender finance? What will the interest rate be? And perhaps most importantly, how flexible is your lender regarding the length of the financing term? As a fix and flip investor, you know that these things matter, as changes in the housing market can affect the length of time it is prudent to hold a property before flipping it. A lender willing to consider the issues inherent in a fix and flip deal is essential to the process.
Good References From Other Clients:
Can your lender provide references from current or previous clients? Speaking with others who have worked with your lender can provide valuable insight into a lender’s standard practices and the quality of your lender’s customer service.
Licensed, Bonded, and Insured:
Will all funds be handled by a licensed, bonded, and insured company? It almost goes without saying that this requirement is necessary, as it offers a layer of protection that you would not want to be without.
Just as you have developed relationships with realtors and contractors, developing a relationship with a reputable hard money lender is essential to your investing success.Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.
Your Hard Money Loan Plan
There is no doubt that when looking to make a real estate investment, choosing a hard money loan is a great option. However, many people do not get approved for the loan because they were caught off guard with the loan application requirements. To ensure a better chance of having the loan approved, check out our checklist below.
The Hard Money Loan Application Checklist
It has taken some time, but you have found the right investment. However, the location may not be in the best of neighborhoods. This will quickly send a red flag to your lender. The collateral for the loan is intertwined with the investment property. The lender will only give you a loan if they feel that their investment is safe. You should have pictures of your property as well as the surrounding areas to give to your lender. This will allow them some visualization into what they are loaning their money to. Having a number of comps for the properties that surround yours will be helpful as well.
How are you going to repay the loan at the end of the term? Hard money loans are for a very short time period. You are going to need a plan on how you will be repaying the loan. Whether you hope to sell the property or refinance it, your lender is going to want to know your exit strategy.
Even though the hard money loan is all about the investment property, your lender may need other documentation. They may ask for income verification, what other assets you may have, and what your credit is like. Having all your documentation together and organized will make for an easier process.
Bring Your Game Plan:
The Hard Money Lender or Private Money investor is going to want to know what your game plan is. If you are going to renovate the property, make sure you bring all quotes from any contractor that you have talked to. By specifically laying out your plan and the costs associated with the plan, your loan is more likely to be approved. If you have made investments in properties before, show your lender what you did with them. Your experience and track record will count.
Make sure that you are ready to step-up to the plate. If your lender calls, do not wait two days to return their call. A sense of urgency is important with these lenders and they need to be reassured again and again that you really want this loan. If more documentation is requested, try to get it to them within a 24 hour window. This is not the time to lay back and wait to see what happens. If you want the loan, it’s up to you to communicate in a timely manner.
Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.
How To Communicate Effectively With Hard Money Lenders
Hard money lending is a very different animal than traditional lending for real estate investing. Instead of dealing with an employee checking off boxes in a file, when you work with a hard money lender, you’re working with an investor just like you. This means that your communications can be much more direct and much more symmetrical. After all, your lender is looking for the same thing you are — a profitable transaction.
Hard Money Lenders Want Deals
When you work with a traditional lender, the loan officer’s primary job is to protect the bank by not making bad loans. If he makes a good loan, nothing much will happen but if he makes a bad one, he could get fired. A private lender comes to the transaction knowing that there’s a cost to not making a loan. If he can’t work something out with you, his money will continue sitting at a low rate of interest. With this in mind, the best hard money lending conversations are held from an attitude of trying to make a deal happen, rather than trying to prevent one.
Be Prepared With a Deal Story
Since private lenders are investors like you, they’re usually looking for a deal story, just like you. This doesn’t mean that they are looking to make foolish or reckless loans. Instead, it means that hard money lending is about more than just checking boxes in the file. Exact numbers might not be as important if you can answer the lender’s questions and show how it is a good loan for him to make. This is one of the reasons that investors turn to hard money lending for deals that are lucrative but also outside of a traditional lender’s box.
Be a Partner
Hard money lenders can be partners. The nature of their financing means that they will take a more holistic view of you and your application package, just like a partner. In addition, many of them are former real estate investors. Talking with them like a partner won’t just make it easier to build a relationship that could lead to a closed loan. It could also give you the advice that you need to turn an almost-failed deal around or to turn a good deal into a great one.
Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions, about private money loans and private money lending.
Loan Steps for House Flipping
If you go by historical data, then the very first mortgages that were issued happen to be traditional mortgages itself. It wasn’t until later that the concept of mortgage financing came into vogue for the low-income buyers or those who happen to have special demographic requirements. Arm yourself with paper, pencil and a loan mortgage calculator and get set to do the needful steps as discussed below.
These four steps below will help you to get a traditional bank loan to flip a house:
- Have a look at your credit score: Before you do anything further, the very first thing you should do is check out your credit score at the moment. This is essentially because good credit scores are extremely important for the purpose of obtaining bank finances.
You should have a minimum score of 620 if you’re looking to get approved, but the interest rates involved aren’t going to be great. The idea is to try to raise your score from a few months before you actually go ahead and apply for a mortgage loan.
- Have all your documents in order: It’s rather important that you have all your documents in order. It’s also necessary that you get your income and assets verified if you’re looking to get a traditional mortgage loan. Moreover, you need to be prepared to put down the value of at least 20 percent of the value of the house or pay Private Mortgage Insurance (PMI).
This Private Mortgage Insurance is obviously required by lenders essentially because of the risk of default. Amongst all other documents that you’ll be required to produce include W-2 tax forms, your most recent pay stubs, plus your employment history as well as bank and account statements.
- Send applications to several places: Once you’ve come to a definite conclusion about mortgage requirements with the help of a loan mortgage calculator, then it’s time you contacted several lenders regarding this.
This is essentially because the terms keep varying across lenders and you might feel that the bank where you conduct your day-to-day transactions isn’t the ideal choice. You should also run a check of the credit unions that are known to offer better rates to their members.
- Supply extra documents when requested: You’ve got to understand the fact that due to the increasing number of house defaults, lenders are also scrutinizing mortgage requests far more carefully.
For instance, if you’re self-employed you should be prepared to submit copies of your last 2 years’ taxes at least. Massive layoffs have given lenders all the more reason to ensure the fact that you’ve got cash reserves after you’ve bought the home.
Keep in mind the above steps when you’re going to take out a traditional mortgage. Make sure you’ve got an approximate estimate with the help of a loan mortgage calculator before you go about doing anything.
As a house flipper, getting a traditional mortgage loan isn’t that difficult provided you do things the right way at the right time. If a traditional mortgage doesn’t work out and if the loan to value ratio is high, give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions,
Setting Personal Goals & Objectives-The Path to Wealth
It’s time to start planning on ways to cope with the challenges of tomorrow. Start with your own goals. Set a time frame and financial framework within which you intend to implement action to achieve them. Understand the rules. Learn what to do and what not to do. Like the cop said to the man who asked him: “How do you get to Carnegie Hall?” – PRACTICE, PRACTICE, PRACTICE!
A real estate investing career rarely starts and stops at the same place. It does not follow a straight line. There will be twists and turns all along the way. Markets will change. Your needs will change too. Your financial situations will change. The more you learn and the more confidence you get, the more your real estate investing business will evolve down the path to financial freedom.
17 Successful Wealth Traits
Successful entrepreneurs are different from average people. Here are some time-tested concepts that they share:
- The Key to Becoming Rich Is to Truly Want to Be Rich.
- For the Rich, Financial Success Is An Overriding Priority. The First Obstacle They Must Overcome Is Often Their Own: Fear, Greed, Cynicism, Guilt, Laziness, Lack of Discipline, Bad Financial Habits, Ego, Ignorance and Arrogance.
- The Rich Take Time to Plan Their Financial Objectives First.
- They Are Willing to Sacrifice Time and Effort to Succeed.
- They Gamble on Themselves, and Invest in Others.
- They Are Patient; Willing to Wait for the Right Opportunity.
- The Rich View Problems as Challenges to Learn From.
- They Work for Others Only In Order to Learn – Not for Money.
- The Rich Made Their Fortunes in Their Own Businesses.
- The Rich Have Learned How to Use Credit and Leverage.
- The Rich Don’t Work for Money, It Works for Them.
- The Rich Have Learned Ways to Create Their Own Currency.
- The Rich Find Ways to Protect and Conserve Growing Wealth.
- The Rich Use Multiple Strategies and Entities to Reduce Tax.
- But, They Focus Energy on Increasing Assets Instead of Tax Avoidance.
- They Learn Ways to Compound Assets Using Tax-Free Trusts.
- They Find Ways to Avoid Estate Taxes to Compound Wealth.
Once you’ve gotten your plan down on paper and internalized, and winning principles incorporated into your methodology – START DOING IT! Resolve to find your place among those at the top of the heap whatever the challenges; and to stay there.
6 Goal Setting Questions to Ask Yourself
Here is a broad overview of the goal-setting process. Begin by setting detailed financial objectives – I know at first it can be a time consuming procedure – but it will be your foundation for success. Until you are able to provide comprehensive, accurate, precise, well considered answers to the below questions, you’ll have a tough time achieving long term financial success!
Here are some goal setting questions to get you started in improving your real estate investing business.
- WHAT ARE YOUR LIFE OBJECTIVES IN TERMS OF PERSONAL AND FINANCIAL GROWTH?
- HOW MANY YEARS ARE YOU WILLING TO WORK FOR THESE COMMENCING WITH THIS CLASS?
- HOW DO YOU INTEND TO ACHIEVE THIS? BE SPECIFIC AS TO WHAT YOU’LL DO, AND HOW YOU’LL DO IT.
- WHAT SACRIFICES ARE YOU WILLING TO MAKE IN TERMS OF YOURS AND YOUR FAMILY’S LIFE STYLE?
- DO YOUR PLANS INCLUDE OTHERS IN YOUR FAMILY? ARE THEY IN ACCORD? WILL THEY HELP OR HINDER YOU? HOW? WHEN?
- WHY DO YOU FEEL YOUR OBJECTIVES ARE WORTHWHILE?
Think of goals as promises you make to yourself in private. They’re day dreams put into action. A universal truth is that you’ll rarely exceed your own expectations of yourself. So you have to deal with what kind of a person you want to become – you’ll need to devise sort of an ethical and moral framework within which you want to work so that you’ll feel good about yourself at the end of the trail, once you’ve managed to climb to the top of the financial mountain.
We here at California Private Money Lenders are here to answer questions and provide private money loans to help in your wealth acquisition. Give us a call at 707-315-1119 or fill out our Borrower Form or Contact Form and one of our trained private money specialists will be in touch promptly to answer your questions.
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