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Frequently Asked Questions – FAQ

SELLERS

Not properly preparing a home for sale can put a home owner at a huge disadvantage.  Every home is unique so its best to schedule a free seller consultation so we can explain what needs to be done in your home to get you the highest price and the fastest sale.

The most common method to determine the value of your home is by a real estate agent completing a comparative market analysis (CMA). A CMA is an in-depth evaluation of recently sold “comparable” homes in the past 6 months.  The other way would be to pay for an appraisal if your home isn’t in a cookie cutter neighborhood.

This is a common pricing mistake that sellers sometimes make.  Many sellers believe they should price their home $5000 to $10,000 higher than the Realtor suggests to leave room for negotiations.  A well priced house will sell fast and for close to list price.  The longer a home sits the less the seller will receive.

If a home buyer is obtaining financing from a bank, the bank will complete an appraisal.  The appraiser looks for potential safely hazards and concerns.  Some common bank required repairs include broken windows, peeling paint, missing handrails, missing electrical covers and roofs that are in poor condition.

BUYERS

Yes.  You want to talk with a lender first so you know exactly how much you qualify for and to make sure you are purchasing a home that is in your comfort level.  You also want to understand exactly what costs are associated with buying a home.

It’s important that a buyer has someone to represent them in the transaction.  You want to have someone looking out for your best interests and negotiating the best possible terms for the buyer.  One thing you never want to do is the call the listing agent because you don’t want to bother your Realtor.  The listing agent represents the seller and is looking out for their best interests and not the buyers.

A buyers representative also known as a buyers agent is an advocate for the buyer-not the seller- in a real estate transaction.  Buyers agents owe full fiduciary (legal) duties, including loyalty and confidentiality, to their buyer-client and work in their clients best interests throughout the entire transaction.

No.  When a house is listed for sale, the seller’s contract spells out the commission rate that will be awarded to a buyer’s agent.  This is known up front and typically covers all, or at least most, of your representative’s compensation.  If it doesn’t, the choice is yours.  You can scratch this house off your list, or decide to view it, knowing that any remaining compensation will need to be addressed.  But even if the seller’s listing contract doesn’t entirely cover your buyer agent’s compensation, and you must pay the difference, it’s quite possible that these relatively small differences will be more than offset by other purchasing terms negotiated with the seller.

Pre-qualification is an informal determination by a lender or mortgage broker stating how much mortgage you can afford. A pre-approval is a guarantee in writing by a lender to grant you a loan up to a specified amount.

INVESTMENT

Exactly the same way as a mortgage with a bank. You are recorded as 1st lien position with clerks office, you will receive a lenders title policy to verify property is free of any lien’s, mortgages, etc.

No, you are simply the mortgage holder of the property.

Yes, we give you the fixed rate of interest for the full term of the loan.

Just like any other asset this money will be paid directly to your heirs or estate.

We would rather invest the 200k into (3) 70,000 deals. This will yield us more cash flow and allow us to pay our premium rates to investors.

Yes, you can contact us with the amount you wish to invest and we will try to find the right assets/properties that fits your situation.

Yes, you will file taxes on interest earned same exact way as if it was earned from bank, investment accounts etc

PRIVATE MONEY INVESTOR

IRS APPROVED FOR RETIREMENT ACCOUNTS?

YES! The IRS does establish guidelines that must be followed in order for a Retirement Account (IRA) to invest in real estate notes tax deferred or tax free. You’ll need the services of a company approved by the IRS to act as your custodian to invest your retirement funds. I have been very pleased with Equity Trust Company in Ohio (www.trustetc.com) and there are others like Equity Trust. I’ll be glad to answer questions about Equity Trust Company and can provide brochures and information from Equity Trust Company.

LOAN TO VALUE

It’s my policy not to borrow more than 70% of the value of a property using private lender money. That leaves at least a 30% cushion of equity. You will receive full details on the value, status and condition of the property whenever I present you with an opportunity to lend.

COST & INSURANCE

Absolutely! I never buy a property without title insurance. However, if I am refinancing a property there would be no need for a new title policy.

I pay for all closing costs so your entire investment goes to work for you. I will pay for the closing real estate attorney, document prep fees, notary fees, overnight mail fees, bank wire fees and recording costs. There is no charges or fees whatsoever incurred by you.

A valid hazard insurance policy is always in place to protect against causalities. You’ll be named as a mortgagee. Insurance distributions would be used to rebuild or repair the property, or used to pay you off.

LOAN POSITIONS

No. Your funds will fund one real estate note secured by a deed of trust on a property with sufficient equity as protection.

DOCUMENTS & PAPERWORK

Your closing package should include: Original Promissory Note, Copy of the Deed of Trust or Mortgage, Copy of Property Insurance Binder naming you as the mortgagee, Title Insurance Policy insuring you against any title problems.

COMMON QUESTIONS

In this unlikely event, I would simply transfer ownership of the property to you. You would be owning the property at 70% of its value, therefore making it easy for a quick sale at a profit. Plus, you have all the legal rights of a secured lender.

It’s my responsibility to protect the property as well as to protect your collateral. My crew would take care of any repairs and you never have to get involved.

WHAT IS PRIVATE LANDING?

When I desire to borrow money by offering the property as collateral, I give my private lender an opportunity to make the loan… and earn high interest rates that are up to 5 times as much as the rates you can get on bank CDs or other traditional resources.

HOW IS THE MONEY USED?

As a professional real estate investor I need to fund new purchases, sometimes do renovations and fix up properties… plus cover the other costs associated with buying and selling houses. For properties we already own and manage, there are times when we want to convert some of our equity into cash — without selling the property. This cash may be used to fund our house buying business, pay off other real estate notes that come due and handle other cash needs.

WHY?

Banks and other lenders require applications, approvals and must follow guidelines imposed by the banking industry. Plus, there are limits to the number of loans they can make to any one company or investor. On top of that, the time it takes for their approval process is never certain. I can move much faster without these limitations by using private lenders. That allows me to negotiate more profitable deals while offering homeowners a quick and easy sale without new loan or deal breaking contingencies.

I make my money by providing valuable services to sellers, buyers, renters and private lenders. By cutting out the middlemen, I can avoid the costs normally paid out for real estate commissions, mortgage broker fees, loan fees and property management fees. I also know how to sell homes at a full appraised value and avoid making price concessions. I can get a home occupied fast to avoid holding costs and how to fix up and maintain properties for less money then most people pay. I calculate my offers on properties so that buyers and sellers get a great deal. At the same time a minimum profit of $30,000 to $50,000 is earned between the time of purchase and sale. I just won’t buy a property unless it makes sense for everyone involved. The deal has “to work” for all parties.

HELP FOR SELLERS & BUYERS

A lot of sellers today are having trouble finding a buyer. And there are typically a lot of hassles a seller must endure to get their home sold. Using a long-term investing approach, I can offer sellers an attractive price, close or take possession whenever they want… and give them an opportunity to avoid all the hassles of selling a house.

I offer several great programs and unique opportunities for buyers. This includes an owner financing program, down payment assistance program and a sweat equity program. Buyers today are finding it more and more difficult to qualify for loans. These programs help buyers get into a home they want to purchase quickly… allowing them to start building equity for the future and helping them avoid throwing their money away on rent.

MARKET CONDITIONS

No. We’re prepared to hold properties for 3 to 7 years. That way we’re not as concerned about short term price fluctuations in home prices as other investors are. Most of our investing plans are determined by the income we expect the property to produce now and in the future.

RATE & TERMS

That depends on the deal at hand, what works for you, and what works for me. It will be much higher than any CD or traditional investment. It also depends on the current market rates.

Most of my private loans are set up on a 4, 5, or 6 year term. However, it depends on what the private lender wants and needs… and what the deal is. So depending on our plan for the property, we might be able to offer you a shorter term… or we may ask if you’re willing to commit to a longer term plan. Regardless, you’ll always decide what term works best for you.

My policy is to pay off (or replace) any private lender who requests an early payoff whenever possible. Sometimes a partial early payoff meets the lenders needs, allowing the rest of their money to continue to earn the high rates. I ask you give me advance notice, preferably 90 days, so we can do whatever we can to meet your request. I would attempt to meet such a request by refinancing the property, selling the property, or most likely, having another one of my private lenders take over your position. There will be a 5% fee of the outstanding principal.

Your interest is fixed and locked in for as long as the note is out. However, I may sell or refinance the property before the full term is up. You’ll always earn your note interest until it’s paid in full. But I do have the right to pay off the note early.

I understand you might be liquidating investments or foregoing another investment program to get a high rate of return. Therefore, I agree in writing, you’ll receive a minimum of 6 months of interest. So, if I need to pay you off sooner than expected, I would either move your mortgage to another property by substituting the collateral, or pay you off in full including a minimum of 6 months of interest earned.

Most of my Private Lenders prefer letting the interest accrue and getting a big check when the property cashes out. A few private lenders prefer payments. These lenders are usually retired and have cash flow needs.

MINIMUM INVESTMENT

“First Position Private Lenders” would usually need a minimum available to invest of $70,000 for most deals. However, there are some deals that come along now and then where a lower amount could be accepted.

GUARANTEE

No. There is no government backed guarantee on these real estate notes. However, your protection and security is the amount of equity in the property that secures the note. I will not allow my private lenders to loan more than 70% of the value of the property securing the note. That way, the private lenders always have at least a 30% “Equity Cushion” in the property.

NEXT STEP:

Once I know how much you want to invest at a high rate of return, when those funds will be available, and how long of a term you’re willing to go, I will begin looking for a deal for you. When I select one that meets your goals and investment objectives, you will receive all the details on the property.

It’s my policy to work with people I already have an existing relationship with and with folks they refer. In other words, I work with folks “By Referral Only.” You can certainly refer potential lenders to me. I’ll explain the program and learn about their investment objectives and goals. Once I get to know them there is a possibility they can also become one of my private lenders.