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Generating wealth with private lending
- 1. Passive Income Wealth with Private Lending The Beneficial Story about being the Loaner’s Lender…
- 2. Agenda Earning High Yields Secured by Real Estate Stay in control of your $ ...while you receive MONTHLY payments
- 3. What Private Lending is NOT! Stocks….too volatile/lack control Bonds….modest returns Turning control over to Wall Street Certificates of Deposit
- 4. What Private Lending IS AKA… Private Mortgage Investing Private Money Lending Trust Deed Investing “Private Lending” refers to a private individual making a loan to another individual with real estate as collateral
- 5. What Private Lending IS YOU are the Bank Where YOU set the rules Your Name is on the Note and Mortgage People Helping People Move Our Economy Ahead!
- 6. The Lessons of Monopoly
- 7. Why Haven’t I Heard of This? Because WALL STREET and Financial Institutions Don’t Make Money From It!
- 8. The Secret of the Wealthy
- 9. Benefits of Private Lending Secured by Tangible Property Safety—Low Risk as long as there is significant equity in the property Great, stable returns Monthly passive income payments
- 10. Basics Let’s assume investor buying median price foreclosed house in Bucks County PA… $250,000 total value $150,000 loan value (60%) $100,000 protective equity (40%)
- 11. Why would someone pay 12%+? Imagine this scenario: Opportunity to buy $250K house for $150K to fix/flip Must close within 10 days Bank will only accept ALL CASH! Does an investor care if funds cost 12% for a short term loan?
- 12. Benefits of Private Mortgages Immediacy: quick access to cash Asset Based Underwriting: borrower qualifications subordinate to the deal Timeliness: short term loans Improvement Costs: rehab loans include funds to improve property equity Number of Loans: Banks limit
- 13. Simple 5 Step Process … just like the bank 1. Borrower requests loan/submits docs 2. Broker confirms deal viability 3. Investor introduced to project & makes commitment 4. Escrow opened, Attorney generates docs Investor funds and settlement occurs 5. Brokerage servicer manages loan… investor receives monthly payments/payoff
- 14. DONE FOR YOU System We do virtually all the work Find the borrowers Our team qualifies the deal Our team handles all paperwork Our team handles settlement Investor agrees to a deal, writes the check and then cash all the monthly checks/ final payoff We also handle any problems (should they occur)
- 15. What Does It Cost Investors? Unlike most Financial Institutions… NO INVESTOR FEES—ever! So how do WE make money? Modest spreads
- 16. Typical Investment Non-owner occupied investment properties Rehab loans for fix/flip deals 65% maximum Loan to Value 3-12 month term 1st mortgage … sometimes a 2nd 7-10% Interest rate 1% servicing fee Within 75 miles of our office
- 17. How Am I Protected? Risky to go it alone… Experienced parties protect everyone: Licensed appraiser values property Licensed attorney prepares all documents Broker ensures all lending laws followed Title company issues title insurance Escrow agent records lien against property Insurance company hazard policy Foreclosure company handles delinquency
- 18. Every Investment Has Risk Some loans may have late payments (you get paid more for that—late fees) A portion may turn in “default notice” A smaller portion go into “foreclosure” Very few go to sheriff sale Why? Significant Protective Equity! The MOST important numbers in private lending are VALUE of the property & LTV
- 19. Private Lending Vs Stocks Private lending Secured by property Great cash flow Use other people’s experience Use other people’s time Passive income Fixed rate of returns Higher performance than stock market Stocks NO COLLATERAL Not good for cash flow Change in value based on supply/demand—beyond your control Pure speculation! Common +/- 25%/year S&P 500 average lower returns
- 20. Lending Vs Property Ownership Private Lending Sets all the rules for funding Does little work Less risk because of protective equity Gets paid first Laws protect the lender’s capital Shielded from litigation on property Property Ownership Pays all of the closing costs and fees Does the most work Carries most of the risk to enhance value and exit with profits Gets paid last Foreclosed if don’t pay Prime target for law suits
- 21. Why Timing Right Today? Housing market declines/foreclosures put investment properties at all time lows GREAT PROFIT OPPORTUNITIES for those who can buy with CASH Transfer of wealth…just like in the great depression YOU can participate on a done for you basis, leveraging the efforts of experts
- 22. Sources of Funding Investment portfolio diversification Retirement funds Self-directed IRA’s Collateralize equity in investment real estate/land Business Lines of Credit What is your good credit doing for you?
- 23. Conclusion Private Lending is one of the safest investments you can make that offers both a high return and consistent monthly cash flow Available Done For You!
- 24. Possible Next Steps Are you aware of someone who needs CASH for investment properties? Are you aware of someone who may like to take advantage of one of the greatest opportunities in our lifetime with low risk and high returns…done for you? Contact Jay Leigeber 215-256-4687
- 25. Thank You We hope this presentation was informative We KNOW the opportunity is real Perhaps it is right for you We would love to discuss your individual situation and answer any questions Jay Leigeber 215-256-4687 Jay@CapitalValuePlays.com
Notas do Editor
- Hello everyone, my name is Jay Leigeber with Capital Value Plays.Today’s presentation is on Generating Massive , Passive Income Wealth with Private Lending. I hope you get a huge amount of value from this short presentation.We are going to talk about how the real estate market is involved in one of the GREATEST transfers of wealth in our lifetime. Maybe you are currently involved…maybe not. But the situation that will last for at least the next 3-4 years is quite unique. The question many of us ask is are we fully benefitting from this situation or just leaving it to others with our heads in the sand?The perspective I’m talking about is a unique opportunity for participation. It’s not about buying the real estate yourselves. And it’s not about being the direct lending source. Rather…. by being a loaner’s lender you can gain most of the benefits with almost none of the work.
- Let me ask each of you a couple of questions:What is the hardest thing to get access to RIGHT NOW in this credit frozen market?That’s right: CASH and CREDITIf you have CASH and CREDIT, what is on sale?—fire sale, discounted , pennies on the dollar everywhere in America?Not just real estate…the real deals are in DISTRESSED REAL ESTATEToday we’ll discuss our Gold Star Private Lending program: which enables you to Earn High YieldsWhere your capital is secured by safe real estateAnd YOU stay in control of YOUR money….and receive nice, monthly payments
- Let me start by sharing what Private Mortgage Lending is NOT------------------------It’s not about stocks…that from my perspective is high risk speculation with all the daily and weekly volatility ----------------It’s not about bonds ---------------------It’s not about investing on Wall Street, where someone else makes the big bucks and you get the scraps--------------------And it’s certainly not about Certificates of Deposit that pay puny 1-3% returns
- So what is it?-------------------------You may have heard private loans on real estate called different things-----------------------Private lending refers to a PRIVATE INDIVIDUAL, like you or me, making a safe LOAN to another individual using secure real estate as the collateral
- With our Gold Star private lending program….You are the bank. You make the rules. Your name is on the Note and Mortgage--------------------------It’s a way of people helping people move our economy out of the doldrums by financing beneficial activities
- In the game of Monopoly, who always wins? Is it the guy or girl who acquires the right properties…..or the one with the most houses and apartments?No, it’s really always the bank. See, the bank makes all the rules. They always have the most money and never go broke.Private lending is being the bank, making the rules and making the money…while moving all the risk to others.
- So you might be wondering, why haven’t I heard of this?Well, Wall Street and the financial institutions don’t make money from private lending. They want everything to go through them and make billions of dollars profits.Remember the old saying “the rich get richer and the poor get poorer?”
- In fact…private lending has been common among the wealthy for generations because it can be a fantastic way to generate passive income wealth.But today, we’ve decided to share this opportunity with YOU.
- Let me share just a few of the many benefits of our Gold Star private lending program---------------First, you’re secured by tangible, real property with value.--------------Second, --safety. As long as there is value in the property there is little risk. These investments are secure.--------------Unlike the modest rates of traditional mortgages…private lending generates amazing returns--------------And best of all, predictable payments every month. Who always gets paid first? That’s right…the bank is always paid first. And if the borrower doesn’t pay…they get the house. In our cases these are investment properties worth much more than the loan balance.
- Let me walk through a very common cookie cutter opportunity:Let’s assume an investor wants to purchase a bank owned home in a desirable community in Bucks County.--------------------------While it used to be worth more, today the homes value is $250,000. The investor wants a loan for $150,000 to buy and fix up the property to resell it.Because the loan is only for 60% of the property’s value, there is $100,000 in protective equity adding additional cushion to the loan.Notice a couple of things about this transaction. It is an investor with an investment property. In this case we are going to require that the investor pay us an interest rate that some would consider outrageous for this loan…because it is a property coming out of foreclosure that needs some fix up. Both of these factors make it riskier than a loan to a homeowner on a primary residence in move in condition.
- You might be wondering….why would someone be crazy to pay 12=15% interest?----------------Well, imagine this scenario. You’re a real estate investor. You get a chance to buy a property worth $250 in today’s market for only $150. That’s buying for just a little over half price. To get this deal you have only 10 days to close and the bank will only take cash. You know you must act quickly or someone else will get the deal.---------------Do you care if you have to pay 12% interest for at most 6 months? Of course not…you are thinking about all the profits you can make on this lovely house.Welcome to real estate 2011!
- Let me summarize exactly why someone will pay 12% plus:---------------They need access to money much faster than conventional lenders can accommodate.---------------The borrower can be less important than the value of the property/profit potential of the deal---------------Conventional lenders don’t like short term financing…we do----------------Rehab loans can include the cost to improve the property, substantially improving value and equity---------------And…traditional lender limit the number of loans an investor may have….we actually prefer to do business with the experts that are involved in many deals or those who have a large portfolio of investment properties
- So how does this lucrative banking business work? Just 5 simple steps in our Gold Star Private Lending program-------------------First the borrower requests a loan and submits all the documents we require.------------------Then our broker, a professional in handling loans confirms the viability of both the property and the borrower.------------------The investor, possibly you, is introduced to the opportunity and then makes a commitment. Many times, it’s first come first served as the opportunities come and go quickly.--------------------Then, an escrow is opened with a bonded and reputable title company and all the paperwork and investor funds are submitted for settlement------------------------Lastly, our broker services the loan. You sit back and receive your passive monthly income.
- Pretty simple…-------------------------With our Gold Star program, we do the all the work to create a verified opportunity---------------------------The investor just looks at all the details and decides yes or no, if they want to move ahead they write the check and everything happens smoothly----------------------And if there are problems…our team of experts jump in and handles those too
- What does it cost the investor? ----------------------We’re not Goldman Sachs or Morgan Stanley with upfront or back end load fees……..we just present the deals and you decide if what is offered is appealing to you.-----------------------------So, now you may ask, Jay…how do you make your money? Pretty simple, we collect a spread between what we collect from the borrower and what we pay you. We do all the work and give MOST OF THE PROFITS TO YOU. We are able to do this because the borrower is willing to pay whatever it takes to get the money. And if we treat you right, you’ll keep coming back with more and more funds or referring your friends and that allows us to make even more loans.
- Let’s summarize the typical investment parameters of our Gold Star private lending program.We’re only loaning on investment properties…not in the borrowers primary residence. Typically these loans are for rehab properties.The most we will lend is 65% of the current value of the property. Our loans are only for short terms and generally are in the first lien position.We typically pay 7-10% interest to you, the investor. Sometimes even more. There s usually a 1% servicing fee.And finally, we only do deals in the areas we know, where it is easy to go out and see the neighborhoods the properties are in.Funding these deals, we have found are the way to massive profits in this incredible real estate market…without having to do all the work or take most of the risk!
- Many of our investors in the past have asked “How am I protected?”Good question, but that depends on how one go about it….-------------------------------Private mortgage lending is something that you can choose to do on your own…however, doing it all on your own probably adds a lot of risk if you don’t have the proper team in place--------------------------However in our Gold Star program…there are many professional parties involved to protect everyone.First, we use a licensed appraiser to determine the value of the propertyAn attorney makes sure all paperwork is legal, a broker ensures all lending laws are followed. a reputable title company to insures the transactions and the escrow agent makes sure the mortgage is correctly documented. Of course all properties must have adequate replacement cost insurance.And lastly, we use a foreclosure attorney in the unfortunate situation if a borrower doesn’t payThe whole process is as safe and transparent as it can be so all parties are protected.
- It’s only fair to admit that all loans have risk. But I’d like to address this specifically so you can understand what to expect.---------------------It’s not uncommon for a borrower to be late at least once. You actually get paid extra for that from late penalties.A portion of these loans turn into default and some even go into foreclosure. -------------But very few make it all the way to the foreclosure auction. Why? Simple, too much equity to lose by the borrower. Think about it, if you have the $250 house and owe just $150, you are going to move heaven and earth to live up to your payback responsibilities.--------------The most important thing to look at in these deals is the value of the property. That’s one reason you want our full team involved.
- Some folks ask “what are the key differences between private lending and investing in stocks?” Let me highlight a few of the differences.-------------------------The biggest difference is security. Private mortgage loans are backed by safe real estate with a huge cushion of equity. Stocks on the other hand are just paper.Private lending is an incredible, quick cash flow generator. Most stocks are not designed for cash flow.With private lending you are leveraging other people’s expertise and time to CREATE VALUE, while stocks go up and down on factors outside of your control. Sometimes it seems that investing in stocks are pure speculation as you watch the prices go up and down 10, 20 even 25% without a real understanding of why. That’s great on the upside but leaves you stymied on the down swing.Private lending is all about predictable, passivew income and is relatively secure. Comparing historical returns…the loans we make to investors can average higher performance than the stock market.
- Others ask to clarify the differences between lending the funds and actually owning and fixing up the property.To be clear…we believe there are fantastic opportunities today to acquire distressed investment properties…we don’t lend our funds if the deal isn’t very profitable. But there are advantages to being on each side of the promissory note.The lender…just like the bank sets all the rules of the loan. The borrower pays all of the fees for the appraisal and settlement costs not picked up by the seller. The lender looks at the case presented by the borrower and decides if the deal is attractive, then they fund the deal and cash checks. The real work begins for the borrower when they get the funds because they have to solve all problems related to the property and then either rent it or sell it. And with today’s bargain basement prices on properties, if they do things well the profitability can be huge.Regardless of how profitable the deal turns out…the lender gets paid what they are owed first and the borrower keeps the excess profits.Should problems occur that make it difficult for the borrower to pay, their capital is secured by the property and the law, while the borrower could lose it all if things go south. Finally, in today’s litigious society, owners of properties are at risk of law suits but lenders never face such targeting.
- Finally, let me address why the timing for private mortgage lending is right today.------------Without question, real estate is on sale today in America. With property values in most cities being down 25% or more from the peaks in 2007, and even more for the distressed foreclosure properties, there are great profit opportunities for investors who can come to the table with CASH.___________Some people are getting rich doing all the work of buying and fixing up the properties.We have chosen to participate in this transfer of wealth by focusing just on getting the cash to the people who do all the work, and earning a very nice return for our lending partners.
- Some people say this really sounds interesting…how can I participate?-----------------------Of course the first way to participate is to diversify your investment portfolio. Why leave it all to the risks of the rising and falling markets? Get involved in something that pays a fixed rate of return that is quite amazing.------------------Another common way to participate is to shift retirement funds into a self-directed IRA which can participate in our loan program.__________Another unconventional way to think about making the most of what you have is if you happen to have significant equity in investment properties, business properties or even land. These can be safely collateralized to generate funds that can be lent…and you end up making a spread----------------Finally, many people we know work hard to maintain stellar personal credit scores. One consideration is to leverage this great credit with a business line of credit that could be tapped to fund loans.It’s all just a financing game. Since the interest rates that our program pays are so high, it’s often attractive to participate with multiple source of funds.
- To summarize, I’d like to state again that private mortgage lending is a safer investment vehicle which also offers a very high return. These loans are backed by real estate with a big cushion of equity. Most importantly, the fixed, consistent monthly cash flow starts immediately.While this is something you could do all on your own….---------------Through Capital Value Plays Gold Star program AND our team of professionals it is also available done for you
- If this concept sounds interesting to you------------------------Perhaps you are aware of someone interested in buying investment properties who is looking for cash to close deals quickly-----------------------------Or perhaps you might know someone who wants to participate in one of the greatest profit opportunities of a lifetime…from the sidelines, taking very low risk and high return position without doing any of the work.-----------I’d love to spend more time discussing this rare and unique program with either of these folks.
- I certainly appreciate your hearing this beneficial story about becoming the loaner’s lender.----------------------We know the opportunity is real…perhaps it is right for you.-------------------------I’m available to discuss your personal investment goals and options and answer any questions you may have about private mortgage investing.