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Private Mortgage Lending: The Basics to Becoming Your Own Bank


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Did you know you can become the bank and lend money for real estate purchases?

Did you know you can earn interest completely tax-free, backed by real property as collateral?

Did you know you can invest in real estate out of your IRA using a specific type of IRA?

Learn all this and more in the comprehensive guide outlining the basics of private mortgages.

We will discuss WHY private lending works and how real estate investors can afford to pay higher rates of interest than what you may be used to earning.

Published in: Business, Economy & Finance
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Private Mortgage Lending: The Basics to Becoming Your Own Bank

  1. 1. Private Mortgage Lending Learn the basics. Become the bank Dan Schwartz Real Estate Investor and Coach Baltimore, MD
  2. 2. Private Mortgage Lending Learn the basics. Become the bank All materials available on this training and provided by Equity Merchants, LLC are samples and for informational purposes only. Equity Merchants, LLC does not provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. You are solely responsible for ensuring that your business practices comply with all applicable, local, state & federal laws.
  3. 3. Background Traditional banking is not what it used to be Investors play a role in economic recovery Real Estate is “On Sale”  Huge Opportunity
  4. 4. Why Listen to Me? Started Equity Merchants in 2010 with Co-Founder Mike Casey Completed over 100 transactions over next 2.5 years Close to $1,000,000 borrowed right now for renovations and rental acquisitions Spent over $20,000 on education and mentorship
  5. 5. Mike and I
  6. 6. Next Up What is a Private Money Loan? What Is the Process? (deal example) Benefits of Private Lending FAQ: What are the “Worst-Case-Scenarios?” Where Do Funds Come From?
  7. 7. What is a Private Money Loan? It is a loan made to a real estate investor secured by real estate. Private money lenders are given a first or second mortgage that secures their legal interest in the property and their investment. They are becoming more and more commonplace.
  8. 8. How Does Your Bank Make Money? Equity Merchants Cuts out the Middle Man
  9. 9. Who is it for? Ordinary people like doctors, lawyers, accountants, retirees…etc. People getting very low, inconsistent returns in retirement accounts People that want to invest passively without being a landlord
  10. 10. WHY Does this Work? Undervalued Real Estate Marketing for off-market properties
  11. 11. WHY Does this Work? Investors
  12. 12. WHY Does this Work? Undervalued Real Estate Marketing for off-market properties Strict Due Diligence Process Ability to act QUICK!
  13. 13. What is the Process?
  14. 14. Documents Promissory Note Mortgage (Deed of Trust) Insurance
  15. 15. Deal Example 5312 The Alameda AfterBefore
  16. 16. Deal Example Before After
  17. 17. Deal Example Before After
  18. 18. Deal Example Purchased for $42,500 via short sale Private lender lent $65,000 at 10% accrued annually After renovation, we put tenant in place and refinanced the property with a commercial lender Privately Lender received payoff of $68,864 $3,864 passive profit…tax free*
  19. 19. Lets Look at Private Lending vs. Traditional Savings 2% Bank CD 10% Private Money Loan *Assume 150k Invested 2 Months 500 2,500 4 Months 1,000 5,000 6 Months 1,500 7,500
  20. 20. Where Do the Funds Come From? 401K (past employer) Personal or Business Lines of Credit Savings/Checking Accounts Traditional and Roth IRAs Self-Directed IRAs* Home Equity Lines of Credit Liquidated Mutual Funds/Stocks/Bonds
  21. 21. Self-Directed IRAs An IRA that requires the account owner to make investment decisions on behalf of the retirement plan. In order to invest out of one, you need to “roll-over” your IRA funds into a Self-Directed IRA using a 3rd party custodian (IRS laws)
  22. 22. Self-Directed IRAs The ideal retirement investment vehicle: Self-Directed ROTH IRA Allows you to invest and earn money tax-free. You only pay taxes when you take money OUT at retirement.
  23. 23. Self-Directed IRAs
  24. 24. What Happens If Investor Doesn’t Pay!? Restructure Payment Schedule Deed-in-Lieu of Foreclosure Foreclosure Lenders will profit after sale of house
  25. 25. Is there a Minimum Investment? Typically depends on the real estate investor’s program Deal Specific
  26. 26. What if I need to liquidate? 45-90 day written notice required to replace funds with another investor Typically no withdrawal penalty Not Recommended
  27. 27. Who handles the details? Closing Attorney Real Estate Investor
  28. 28. How do you get paid? Monthly Payments Lump Sum Payment (Principle + Interest) Quarterly Payments
  29. 29. Can I make long-term loans? YES!
  30. 30. Additional Questions ???
  31. 31. Benefits Produces consistent high returns Rates do not fluctuate Straightforward terms Recorded in land records Secured by equity-rich and marketable real estate Tax-free wealth building
  32. 32. Benefits Passive Income (minimal time required) No dealing with tenants or contractors Profitable with NO CAP on earnings More time to improve your golf game Multiple loans can be made Booming industry
  33. 33. Private Mortgage Lending Learn the basics. Become the bank Office Line: 443-848-8028
  34. 34. Disclaimer This is not an offer to sell securities. Any person, entity, or organization must first be qualified by the company and read all of the offering documents and attest to reading and fully understanding such documents. Equity Merchants, LLC and its affiliates are not licensed securities dealers or brokers and as such, do not hold themselves to be. This presentation should be construed as informational and not as an advertisement soliciting for any particular purpose. All securities herein discussed have not been registered or approved by any securities regulatory agency in accordance with the securities act of 1933 or any state securities laws.