What is Private Lending? “Private Lending" refers to a private individual making a loan to another individual with real estate as collateral. You Are The Bank Your Name Is On The Note and Deed of Trust
Benefits of Private Lending• Secured by tangible property• Safety - low risk – As long as there is value in the property, your investment is secure• Great returns• People are familiar with real estate investing because real estate ownership is so common.• Receive monthly payments
Basics• Let’s assume we have a $500k house in the San Francisco Bay Area… VALUE: $500k PROTECTIVE EQUITY: $200K (40%) This is our “protection” - our cushion… LOAN: $300K (60%) We lend NO MORE than 60% of value…
Why Would Someone PayThat Kind Of Interest…? IMAGINE THIS SCENARIO: You get a chance to buy a property worth $500,000, in today’s market, for $250,000. You have 5 days to close. The bank will only accept cash. Do you care if you pay 12% for 6 months if you can CLOSE on the deal?
Someone WILL Pay Because…• Immediacy: Access to capital much faster than conventional lender.• Asset Based Underwriting: Borrower qualifications can be subordinate to the value of the property.• Timeliness: Conventional lenders are not fond of short term loans• Improvement Costs: “Rehab Loans” can include the cost to improve the property, increasing equity• Number of Loans: Traditional lenders limit number of loans
How Does It Work? 5 STEP SYSTEM Remember: YOU ARE THE BANKBorrower Investor Escrow Our Broker OurRequests Introduced Opened & Services BrokerLoan and To Project & Investor Loan. You ConfirmsSubmits Makes Places Receive Viability Docs Commitment Funds Monthly $$$
Every Investment Has Risk! • Almost all loans will have at least one late payment – The investor actually gets paid more for that because the borrower pays penalties. • A portion will turn in “default” • A smaller portion will go into “foreclosure” • Very few make it all the way to auction. Why? – Protective Equity! • The MOST important number to look out for in private lending is VALUE of property
Private Lending vs. Stocks Private Lending Stocks • Great cash flow generator • Not good for cash flow – and quickly • Based on demand and • Use OPE (other people’s supply – beyond your experience) control • Use OPT (other people’s • S&P 500 Lower returns time) • No collateral • Passive income • Relatively secure • Higher returns than stock market
In Summary Private Lending is still one of the relatively safest investments you can make, offering you a high return with consistent, monthly cash flow.
Conclusion Do you know someone who would like to take advantage of one of the greatest opportunities in our lifetime with low risk and high returns? Contact: ---
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