Denver Estate Real
Because of the uncertainty of the stock market, many investors are looking for safer and more predictable ways to invest their money. Promissory Note investing, which is also know as Private Money Investing, and Hard Money Investing, offers an individual the opportunity to earn safer, more predictable, and higher returns on their money.
Denver Estate Real
Promissory Note investing is fairly low risk because the loans are backed by the appraised value of the collateral security plus the promise to pay of the borrower. Generally, the loans are conservative--at about 65% of the appraised value of the security. In case of a foreclosure, the property is sold to recover the funds. The borrower's promise to pay and credit provide an additional measure of protection and an exit strategy. Additionally, hazard policies (fire, hail, wind) are insuring the property. The title to the property and the note holder's interest is also covered by insurance-title insurance and lender's insurance. This is the correct way that the investment is structured.
Denver Estate Real
Private Mortgage Notes provide borrowers with an alternative to traditional bank financing for real estate properties. A borrower may not want to pursue bank financing due to time constraints, credit worthiness, or other factors, so they look for individuals or groups to finance their investment. Investors/lenders will take on the risks of lending, and in exchange, will receive a higher than normal interest yield on their investment.
Denver Estate Real
Yields for private mortgage notes are generally higher than the traditional investments available. Return rates of 9% to 15% are typical. The more risk the lender is willing to accept, the higher the return expected. Generally, you want to be listed as the first position lien holder on the property-the first mortgage. You should fully understand the circumstances of a particular note investment before determining the amount of risk you are willing to accept. Take your time and get all of the information that you need.
As in any successful business, being in the promissory note investing business requires that certain important contacts are developed, and certain important skills are acquired.
Promissory Note Investing Tips
Plan
• Plan your cash needs and cash availability
• Plan your time requirements-learning and training time, networking time, personal time
• Plan your business development schedule-develop target dates and target goals
Skills
• Understand the meaning of key words in the loan documents
• Understand the legal terms used in the note business
• Understand the numbers used in calculating investment returns and expenses
• Understand your legal responsibilities
• Understand the borrower's legal responsibilities
• Understand the foreclosure process in your state
• Understand risk in general, and note investing risk in particular
Contacts
Build business relationships with people you can trust
• Investors that you can share ideas with
• Investors that can provide some guidance and knowledge
• Mortgage brokers
• Realtors
• Title insurance companies
• Real estate appraisers
• House inspectors
• Attorneys that specialize in real estate law
• Promissory note experts who advise and consult on notes
Remember, you are probably investing all or almost all of your net worth. You may be also investing other people's money-people that trust you and that you do not want to disappoint. You are making serious decisions that have important present and future impacts on your life and on the lives of others.
Don't take short-cuts; don't hurry; don't over-reach; don't over estimate your own capability and experience.
"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take 0 and go to Las Vegas."
Paul Samuelson
Even though good experienced, professional advice and service costs money upfront, it will save you a whole lot more on the back-end of the investment. Five-hundred dollars spent upfront to structure a deal right may save you ,000 on a back-end.
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