So, what is a Private Loan? It is a loan made to a real estate investor that is secured by real estate. Private Loan Investors are given a first or second mortgage that secures their legal interest in the property and secures their investment. We are not talking about high Loan-To-Value (LTV) ratios the banks and savings and loan institutions make on homes. We offer very low LTV ratios to our Private Lenders to increase security of the loan. Our standard LTV ratios are under 75% of the value of the property securing the loan and frequently as low as 60% to 68%. This means additional security on the investment. For example, if a property is valued at $100,000, our Private Lender will never have to loan more than $75,000 dollars on the property. That’s a 75% loan-to-value ratio. This is obvious a much safer approach from that taken by conventional lenders. These banks get into trouble because they make loans at an 85%, 90%, or even 100% loan-to-value ratio leaving them no equity for transfer costs, if they are ever forced into a position where they have to take back the collateral property. You, as a lender, will never lend more than 75% LTV. As a lender, it is in your best interest to minimize risk and maximize return and this is why a loan should never be made without a 25% safety net. We don’t violate this rule, because your security is at stake. Who Borrows at High Rates and Why? Investors like us do, because we have learned in our business that it’s not the cost of money that matters, but quick access to the funds so we can capitalize on opportunities. Our company can acquire good deals in properties because we can act with lightning speed and can close with cash. Private loans give us this competitive advantage over other investors who take weeks to go through the bank approval process in order to purchase properties. Additionally, if a real estate investor locates a good deal on a property, many times the bank wants to loan on the purchase price not the value of the house, thus penalizing the investor for finding a great deal. Having access to money is generally a deciding factor in investing in real estate, so paying a higher interest rate is irrelevant when compared with the risk of losing the deal.
We will. It’s our job to get you proper documentation and protect your interest. All of this costs you nothing. The borrower pays all costs. If you make a $100,000 loan, you send a check for $100,000 to the closing attorney and you get a mortgage for $100,000.
Your investment is tied to one particular project. The end of the project occurs when the property sells or when it is refinanced. At the completion of your project you will receive a one time, principle plus interest payment after the completion of a project. For accounting reasons, this is a preferred way for our company, as well.
Generally, your investment is tied to a specific project with a timeline ranging from 3 to 12 months. We have lending programs for short term holds of three to six months. We also have longer term holds of one year and longer. You can pick a term that suits your strategy. It’s your money and it’s your choice.
If you want out, a 45 day written notice is required, because we will need to replace your funds with another investor’s money. You really shouldn’t make mortgage loans if you feel you will liquidate this shortly, but the option is always available and we have been able to liquidate in as little as two weeks in some scenarios. Also, unlike with a bank CD, there is no penalty for early withdrawal. Just call us, and we will handle all of the details.
Yes! This is what puts our investment program head and shoulders above the rest. Your investment is tied to a single project that is Worth MORE than you have invested into it. We have such cushion in our projects that our projections have to be off by orders of magnitude before your investment is at risk. We always follow the common sense guidelines that we’ve talked about. Your money will grow two, three, or even four times faster than your current investments and you maintain control. Each one of our properties that we acquire is put through a rigorous financial evaluation in order to evaluate the profitability before the property is ever purchased. Remember that making loans is a business and should be treated like a business. If you set up a simple system and let the professionals implement the system, your loan portfolio can be hassle free and produce staggering yields.
Actually, there are several options but first and foremost, please be aware that “Integrity” is an essential part of our business and we only make sound investment decisions. One Triangle Homes and Rehab, Inc’s distinguishing features is that we have never missed a payment to a private lender.
Additionally, our company’s policy is to invest our own funds into every one of our projects because if we aren’t confident in our investment decisions why should you be? Likewise, if we ever lose the support of investors, we can no longer operate our business and our own investments would be at stake.
However, to answer the question:We could restructure the payment schedule on the note. For example, let’s say we are behind on payments to you. Now Triangle Homes and Rehab, Inc. can and would like to keep the house, but they can’t come up with enough money to bring you current in one lump sum. You could let us make regular payments and make an extra payment on our arrearage in addition, or you could simply add the arrearage to the principal balance and extend the term of the loan. This means you would be collecting interest on interest for the entire remainder of the loan. There are always ways to work it out if both sides are willing.