How I Became a Hard Money Lender
Unlike other investors, my venture into real estate was a natural extension of my secondary business as the IP Ware software developer. However, opportunity and perseverance beget wealth, or at least a decent side income. Aside from my ventures into lease optioning residential property, I and my partner have managed to acquire a number of properties with our own credit. However, when looking at our finances and the return we were getting for the amount of effort involved, we both decided there must be a better way. That is when it occurred to me.
Instead of trying to leverage our existing assets for a diminishing return, perhaps we could be the bank.Here is the scenario as it has played out. First of all, we control a decent number of properties with our own credit. Most were purchased with 100% financing using multiple capital sources. However, each contains only a primary lean and is financed using standard mortgage terms. Subsequently, there is a 20% secondary credit position available on each of these properties.Now normally, an investor would use this 20% equity stake in the existing properties to leverage the purchase of more properties.
However, our approach has been a bit different. Because interest rates are so low, we can borrow against the 20% equity position in each of the properties and loan this money to investors who need short terms financing to control and rehabilitate properties. Essentially, we are using our existing properties as collateral to borrow money at the going finance rate and loan it out at substantially higher rates of return. We have become the bank.For investors who need money fast, this system works out beautifully. They pledge their property as collateral, and we loan out up to 75% of the purchase price.
All parties benefit, and investors with opportunities that do not need long term financing have a source of funds to do their deals. Everyone wins.If you are thinking of setting up this type of program yourself, there are a significant number of legal caveats that you must be aware of. The first is the company funding the second lean holder position on your existing properties must be aware of and amicable to what you are doing. This is a legal requirement of which there is no way of avoiding without committing fraud. Next, the usury laws in your state determine the maximum interest rate you can charge your customers.
There are a host of additional laws that are more specific to the lending process, but a good lawyer will help you work through them.Regardless, there is a decent return to be made helping others do their deals. Use your existing properties to secure the funds to lend, and make sure you have an experienced lawyer to help you sort out the details.+++++++++++++++++++++++=.
Barrett Niehus is a principal for IP Ware Commercial and Residential Real Estate Investment Analysis Software http://www.freetrainer.comMortgage sales hit problems
The housing market has been buoyant over the past few years, but mortgage providers and first-time buyers are both now facing a tough time. Following announcements from the Bank of England that there has been an overall decline in the total number of UK home-buyers, and a declaration from the Financial Ombudsman Service (FOS) that the number of disputes concerning mis-sold mortgage endowments has now hit record levels, it seems that mortgage lenders are facing a bleak time. Add to this the results of a new survey, by the Edinburgh Solicitors Property Centre, which shows potential first-time buyers fear that they may never get onto the property market, and you start to see a worrying picture of the housing market emerge.The problem with the mis-selling of endowment mortgage products has recently made the headlines in the world of personal finance. The FOS admitted receiving 70,000 new complaints about endowment mortgages, the equivalent of 1,300 a week, compared to just 300 a week three...
Mortgage sales hit problems
Mortgage > Mortgage sales hit problems
When Should You Refinance Your Home Loan?
Home loan refinancing replaces your existing loan, usually with a new loan of a lower interest rate covering the same amount of principal. Refinancing can reduce your interest rate, alter the terms of the loan, or combine or consolidate your debts.
While home loan refinancing can be useful for some, keep in mind that it is not always financially sensible. As a rule, refinancing is not beneficial unless the new interest rate is at least 2 percentage points lower than your existing loan.
Reasons for Home Loan Refinancing
1.
To reduce your monthly payments by switching to a lower interest rate.
2. To consolidate debt.
3. To reduce the term of your loan (the payoff period).
4. To draw on the equity accumulation to get money to use for other things.
5.
To convert an adjustable-rate mortgage to a fixed-rate...
When Should You Refinance Your Home Loan?
Mortgage > When Should You Refinance Your Home Loan?
Jackman Financial Group Adds CIO and IT Search Division to it's Mortgage Specialty
Jackman Financial Group, a nationally recognized Executive Recruitment Firm specializing in the mortgage industry, announced their expansion into the IT executive recruitment field by launching their Financial Services Technology and Business Operations Recruiting Division. The venture is co-founded by their newest partner Scott Hahn, former CIO of Centex Home Equity. Mr. Hahn's "C-Level" experience in nonprime and home equity enables him to quickly recognize superior executive talent and personalities to compliment even the most demanding mortgage organization. "We are extremely excited and confident with Mr.
Hahn's abilities. His 16 years of IT experience and training as a top level mortgage executive will add immediate value to our clients" says Jackman Financial Group President Mike Jackman. Mr Jackman believes the most important factor in an executive search is knowing how the executive will fit within the corporate culture. "Scott has instinctive team-building abilities...
Jackman Financial Group Adds CIO and IT Search Division to it's Mortgage Specialty
Mortgage > Jackman Financial Group Adds CIO and IT Search Division to it's Mortgage Specialty
Benefits of a Commercial Business Loan?
Benefits of a Commercial Business Loan??by: John MussiThere are many benefits in choosing a commercial business loan some of which are listed below.A commercial business loan is designed for a wide range of UK small, medium and startup business needs including the purchase, refinance, expansion of a business, development loans or any type of commercial investment.Finance is the lifeblood of a business. Without it you cannot grow.Commercial business loans are generally available from ?50,000 to ?50,000,000 at highly competitive interest rates from leading commercial loan lenders.A commercial business loan can be secured by all types of UK business property, commercial and residential properties.Commercial Business Loans can offer up to 79% LTV (Loan to Valuation) with variable rates, depending on status and length of term.Commercial business loans are normally offered on Freehold and long Leasehold properties with Bricks and Mortar valuations required. Legal and valuation...
Benefits of a Commercial Business Loan?
Mortgage > Benefits of a Commercial Business Loan?
First Mortgage Loans
Before taking out a mortgage, it is important to consider your financial situation and research the many options in the market. Competitive rates are increasing with the number of people seeking loans, so you may need the help of a mortgage broker to inform you of the best deals around.
To start with, you must calculate how much can you repay. The standard rule is that your annual repayment of the mortgage should not be more than 27 per cent of your gross income. You can also set aside around 2 per cent of your gross income to account for unexpected costs. This means that you must be able to repay the loan under any circumstances, without exception.
If you have good credit together with a regular job, you can be eligible for a loan with a down payment of little as four percent. Further, if you are married and your spouse is also employed, things may get even easier for you. However, if you are a single parent, you may find it tough to secure a loan...
Mortgage > First Mortgage Loans
Credit Card Debt Consolidation Home Loans Now Available With the "Payment Buster" Refinance Program
Winter Park, Florida (ContentDesk) March 6, 2006 -- Credit card debt consolidation mortgage refinance loans - http://www.fgmnet.com/debt_consolidation_mortgage_loan.php - can help consumers take control of their credit card debt load by paying off their credit card balances with a home refinance loan. First Guarantee Mortgage (http://www.fgmnet.com) a home mortgage refinance expert resource and multi-state mortgage broker located in Winter Park, Florida is now offering a Payment Buster debt consolidation home loan program to help homeowners with high credit card debt to refinance and gain tax benefits as well as lower monthly mortgage payments.With the Payment Buster debt consolidation refinance program homeowners now have the opportunity to consolidate all their high interest credit cards payments into one low tax-deductible payment.See more...
Credit Card Debt Consolidation Home Loans Now Available With the "Payment Buster" Refinance Program
Mortgage > Credit Card Debt Consolidation Home Loans Now Available With the "Payment Buster" Refinance Program
Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
Sub-prime mortgages are not that much different from average mortgages. They have interest rates, points, and fees. They can be compared online, and they have seasonal trends. The only real difference is that as a borrower with a less than stellar credit record, you will have to pay a slightly higher rate for the lender's increased risk. What is important is that you prepare yourself with information about sub-prime mortgages and compare lending companies to make sure you get the best deal.Paying For RiskIf you have bad credit or declared bankruptcy, a mortgage lender is taking a big risk that you will pay back the loan.
People with bad credit are seven times more likely to default on loans, so lenders make up for this loss with higher interest rates and fees. However, some companies take advantage of people with poor credit, so you should compare companies.Look OnlineYou don't have to meet with a lender face to face to negotiate a mortgage loan. You can go online...
Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
Mortgage > Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
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