Product Description
Private mortgage money offers unique advantages for the professional real estate investor. Private mortgage lenders are able to close most loans in 2 weeks or less whereas institutional lenders require 6 weeks or more to close and fund a commercial mortgage loan. Further, private mortgage loans are asset based; the real property itself is the basis of the lending decision. Hence, if a property is producing or can produce sufficient income to pay the interest on the … More >>
A private mortgage lender is essential to the success of your real estate venture and your business relationship with the lender during the life of the real estate loan. For many real estate investors, working with the right lender means the difference between a sweet deal and a deal gone bad.
Many real estate investors opt to work with private mortgage lenders to escape the bureaucracy involved with the conventional lending process. The global real estate market is competitive and often the speed of the transaction is crucial to the success and outcome of a real estate deal.
Loan-to-Value: Private mortgage lenders are concerned with loan-to-value (LTV) ratios which is the calculated percentage of the requested mortgage to the total appraised value of the property. When working with a private lender, you will want to learn what their criteria are for lending when it comes to the loan-to-value ratio. This will vary depending on the type of real estate investment you are seeking to finance.
For instance, a private mortgage lender will typically lend a lower percentage on raw land and a higher percentage on a multiple unit property that produces cash flow. If the property and the borrower meet the criteria of the lender, they will be more likely to lend the maximum percentage. If the deal is considered less than ideal, the percentage of the loan will be significantly lower.
Private Lender Property Interest: It is important to find out the property interests of the lender with regard to the type of property they would most likely be willing to fund. Typically, the private lender would be interested in a property that is easy to sell if the borrower lands in default. This would most likely be a property that produces cash flow as opposed to a non-income producing property such as raw land.
Property Income Potential: Another consideration of private mortgage lenders is how much emphasis they place on the income potential of the property being considered for financing. Some private lenders insist on a property that provides sound collateral because this adds a great deal of security to the loan. In other instances, private mortgage lenders will also consider cash flow from other existing properties as a substitute.
Exit Strategy: To be sure to keep your private lender happy and hopefully doing business with you on new deals it is very important to a repayment strategy. Private lenders will evaluate whether or not the plans for repayment by the borrower are feasible or questionable. For example, if the borrower plans to satisfy the debt by obtaining another mortgage, the private lender will need to consider the credit history of the borrower.
Decision Making Process: You can expect the private mortgage lender to use a similar decision making process to a conventional lending institution when considering you as a borrower and the property you are financing. The nice part is the private lender may fund a venture that the conventional lending institution would refuse and will provide creative methods when it comes to repayment terms.
I invite you to learn more about Private Money Lending and get my new FREE 20-page ebook titled “Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!” by clicking here http://realestatewealthtoday.com/FREE-eBook.html .
Mike Lautensack is a full-time real estate entrepreneur and creator of the Private Lending Presentation Kit. To learn more about this kit go to Private Lending Presentation Kit.
Although conventional lending institutions have long been considered the popular choice for obtaining a property mortgage, the increasingly fast paced environment has prompted real estate investors to turn to private mortgage lenders to fund their property ventures. This is due in part to the snags and red tape in the convention mortgage lending process and the increased competition in the global real estate marketplace.
Connecting with private mortgage organization that can sometimes be tricky due to private lending being integrated with conventional lending institutions when it comes to the advertising industry. On the flip side of the coin, some private lenders are also conservative about advertising due to probable issues with the SEC on the state and federal levels.
So, how do you cut to the chase and connect with a private mortgage lenders who will finance your next property venture?
Locate a Private Mortgage Lender: Private mortgage lenders are potentially all around you. They reside in your community, they may live in your neighborhood, you may find them through investor associations, perhaps they advertise, or maybe some of your friends can refer you to someone they know. The bottom line is if you look around you, private lenders are virtually everywhere.
Marketing Strategy: Connecting with a private mortgage lender requires a marketing strategy on the part of the borrower. You will need a networking strategy to locate potential private lenders and then you will need a marketing plan as well as a business plan.
Your audience will be private mortgage lenders that are interested in earning a high interest rate on their investment which will be secured by real property along with a loan-to-value ratio that does not exceed 75 percent.
You can choose to market your venture by inviting a group of potential private lenders to a presentation that you have prepared, that pitches the real estate venture to your potential investors or you can opt for other marketing strategies. Other strategies could include advertising high interest on investments, circulating your business card, networking with other real estate investors, mailing information, or locating prospects by word of mouth.
Use Multiple Lenders: As you make connections with private lenders, keep in mind that you may use more than one lender to finance a single real estate venture. In some instances, one lender may be unable to fund the entire deal. In this case you can negotiate one private lender to fund the first mortgage and the other lenders may act as second mortgage holders.
Whatever route you take to connect yourself with a private lender, creativity in marketing and offering your investors a better rate of return, are the keys that open the door to an endless array of real estate investment opportunities.
I invite you to learn more about Private Money Lending and get my new FREE 20-page ebook titled “Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!” by clicking here http://realestatewealthtoday.com/FREE-eBook.html .
Mike Lautensack is a full-time real estate entrepreneur and creator of the Private Lending Presentation Kit. To learn more about this kit go to Private Lending Presentation Kit.
Product Description
Private Mortgage Wealth is an excellent resource and guide for the novice and experienced mortgage investor, and indeed everyone who is interested in participating in the private mortgage industry.
Private Mortgage Wealth cuts to the heart of successful mortgage investment, providing readers with a complete understanding of private mortgage investing fundamentals. It shows how to use direct investments, syndicates and investment clubs to get into the private mortga… More >>
Private Mortgage Wealth: Simple Strategies for Making Double Digit Returns
Commercial Mortgage Liquidity Crisis
We are, indeed, in the midst of a significant and severe credit crunch. Conventional lenders, such as banks, Wall Street investment houses and insurance companies have greatly curtailed their lending activity. Even the very best investors and developers are finding it hard to get projects funded.
The collateralized debt market has dried up. Few bond buyers are interested in mortgaged backed paper today. Big institutional lenders are finding it impossible to turn the mortgages they originate into cash. Put in simple terms; no mortgage buyers, no mortgage loans.
Property owners, investors and developers are left frustrated and without financing.
Good Deals have been Sidelined
The dollar volume of pent-up commercial mortgage loan demand now measures in the hundreds of billions of dollars. Deals that, just a year ago, would have enjoyed quick funding are being rejected by banks out-of-hand. Not because they don’t have merit, but because the banks and their counterparts are caught up in the liquidity crises.
With millions in profit potential at stake, commercial property investors are seeking out non-traditional sources of mortgage funds.
Private Commercial Mortgage Lenders; Funding Deals When Banks Won’t
Privately funded commercial mortgage loans are becoming increasingly popular during this mortgage meltdown. Private lenders, many funded by wealthy individuals, hedge funds or other large pools of capital, often lend their own money for their own portfolios. These unique lenders have not been crippled by the breakdown of the collateralized mortgage bond market. They can still originate loans at will without worrying about who may or may-not want to buy them.
Further, private loans (sometimes called “hard money” loans) can close in just days, as-opposed to conventional loans which, if you get one at all, can take 3 months or more to fund.
There are generally no loan committees, stacks of paperwork or complicated ratios to deal with. If they like your deal and you demonstrate that you can pay them back, they can and will close your loan no-matter-what Wall Street is doing.
What Private Mortgage Lenders Look for
Private lenders are equity based lenders; loan decisions are not driven by the credit of the borrower. It is essential that the collateral property have substantial equity in it. Most hard money commercial lenders won’t lend more than 70% of the purchase price or, in the case of a refinance, the value of the commercial property. So be prepared for large down-payment requests or a good sized 2nd mortgage. Also, borrowers will need to have some cash, typically 10% or more, in any given deal. There is no-such-thing-as 100% financing today. Documentation requirements will be much less than conventional lenders would require but be prepared to back up any claims you make with some proof.
Income producing buildings are favored by hard money lenders but most are willing to consider all property types.
Hard Money Commercial Loans are now Indispensable
With the large conventional lending institutions frozen like a deer in the headlights, private, hard money commercial lenders have become indispensable to the commercial sector. They stand ready and willing to lend against quality buildings or well thought-out development projects. Investors should not give up on finding financing for their best deals until they have looked into a privately funded mortgage.
Private Funds Immediately Available for the Purchase, Refinance and Development of all Types of Commercial Real Estate Property and Construction Projects. Apply For a Commercial Mortgage Online at www.masterplancapital.com Simple 1 Page Application. Receive an Answer the Next Business Day. Fast Closings Available.
Glenn Fydenkevez, a 20 year Wall Street veteran, founded MasterPlan Capital, a commercial real estate investment banking firm, to quickly and efficiently provide capital to commercial real estate investors and developers. He can be reached at glenn.fydenkevez@masterplancapital.com
Glenn Fydenkevez is President of MasterPlan Capital LLC, a dynamic, privately held commercial real estate investment bank, active nationwide in commercial real estate finance and investment.
Mr. Fydenkevez is a 20 year veteran of Wall Street and has served as an officer at one of the worlds largest investment banks.
When ever you need to finance the purchase real estate investments through a private mortgage lenders, you must first locate a private lender with an interest in your particular real estate venture. Private lenders are ordinary people who are willing and financially able to fund your property venture by means of their own assets. You can locate private lenders through networking with others in the business, asking for referrals, or making a public presentation to a group of potential private money lenders.
Assuming you have located the private mortgage lender, you will need to set up a meeting to negotiate the terms of the private mortgage loan. Keep in mind that the private lender you choose can secure funds for you through a commercial institution or through personal assets such as bonds, stocks, or cash. You will want to negotiate terms that will present a win-win situation for both you and the lender.
Financing your real property deal through a private mortgage lender is not difficult however; it will involve some simple steps with documentation that will include a Promissory Note, Mortgage, Certificate of Insurance, and a Disclosure Statement. It is also a good idea to consider any federal or state security issues (SEC) which occasionally transpire through the private lending process.
The Promissory Note and the Mortgage document: The Promissory Note and the Mortgage document the terms you have agreed upon with the private mortgage lender. The Promissory Note explains in detail the terms in which the lender has agreed to fund your real estate venture as well as the terms you have agreed upon to borrow the money. The Mortgage outlines the terms of your performance as the borrower and generally is filed with your local county office by an attorney to insure that the filing process is done correctly.
Certificate of Insurance: The Certificate of Insurance is obtained from the insurance agency of your choice and should be provided to your private mortgage lender. The property insurance should include a title to your lender and a title to you as the borrower. It should also outline the exact terms of coverage with regard to property type and causes of loss such as flood, basic, broad, special, or earthquake.
Disclosure Statement: Use of a Disclosure Statement is always a good idea in a real estate transaction due to the fact that investing involves uncertainty and risks. The Disclosure Statement will outline the risks to your private mortgage lender, as well as your plans for use of the property and any possibilities for change during the course of the transaction. This statement acts as assurance that both you and the lender are aware of the possible risks involved before you enter into the real estate transaction.
Federal Regulations: You will want to check the federal regulations as well as those for your particular state with regard to what is termed as issuing a Security. In many cases, when you work with a private mortgage lender, it is considered issuing a Security under SEC guidelines. To avoid any problems, you may need to register with your state or federal SEC if you do not fall under certain exemptions.
Deciding to fund your real estate venture with a private mortgage lender is a relatively straightforward process and can open the door to diverse opportunities for future opportunities that would otherwise be complicated with conventional lenders.
I invite you to learn more about Private Money Lending and get my new FREE 20-page ebook titled “Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!” by clicking here http://realestatewealthtoday.com/FREE-eBook.html .
Mike Lautensack is a full-time real estate entrepreneur and creator of the Private Lending Presentation Kit. To learn more about this kit go to Private Lending Presentation Kit.
Product Description
In recent years, stock market investing has been proven unstable and not very rewarding. In fact, many people have seen their retirement and personal holding accounts dwindle. This new book provides an alternate to investors. It provides detailed information on how to put money to work in a relatively safe private mortgage investment with a high return of 12 to 15 percent (or more) in most cases. Private mortgages have grown into a multi-billion-dollar industry. Thi… More >>