Private Lending - 5 Key Things All Real Estate Investors Must Do to Start A Private Lending Program
As a real estate investor, when you find a property that is below value or a motivated seller you want to close quickly to be sure you get the deal before your competition get the deal. But, and it is a big "But", it is almost impossible for real estate investors to get traditional mortgages in the post-credit bubble world. The solution is private mortgage lending. Private mortgage lenders are normal people from your local community who are looking to make investments that will yield higher returns than money markets (near zero) or CD's (1% to 3%). Private mortgage lenders will want secure the funds through a mortgage or lien on the property that you purchase as any traditional lenders would do. The BIG difference with private lenders is that they will not require a personal guarantee form you. Private lending, along with lease options and "owner will finance" arrangements, are becoming the popular answer to real estate investing in the post-credit bubble. But is it is important that you know what you are doing before you start a private lending program. Required Documents: Make sure you have knowledge of the basic documents required before you decide on a private lender. The documentation typically includes a promissory note, mortgage, certificate of insurance, and a disclosure statement. it is also important to understand any federal or state security law issues that may come up when you use a private lender. The most important document you will negotiate is the promissory note. The promissory note will create all the expectations between the borrower and the lender. It explicitly lays out the terms and conditions under which you will borrow the money. Read through the clauses carefully and make sure that you aren't tying your hands in the future. The mortgage secures the terms of performance of the borrower. Most lenders will have a title clerk or attorney file it to be certain that it is done properly. The certificate of insurance is very important. Be sure to name your private lender as an additional insured on the property insurance to be sure if anything happens to the property that the insurance company will pay off the private lender first and protects you from having a loan without a property to support it. The insurance certificate will usually include an owner's title policy and a lender's title policy. The disclosure statement states exactly what purpose the property is intended for such a quick flip for profit or long term hold as rental. It is your job to disclose any information that might add risk to the private lender. And I invite you to learn more about Private Mortgage Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html. Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lending Kit. Download your FREE eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders" and learn how to fund your real estate deals with Private Lenders!
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