Private Lenders Earn 15% to 74% Profits Secured by Real Estate!Glen Gallucci
December 3, 2008 — 1,710 views
Are you getting 15% - 74% or more yield from your CDs, stocks, savings accounts, self directed IRAs, pension plan or other investments? If the answer is no, and I'm pretty sure that it is, I have a simple solution that I myself use and have taught others on how to make tens of thousands of dollars more on their investments simply by increasing the yield on the same money they are investing now.
I am going to share with you the way you can control your investments and safely make them grow three, four, even five times your current rate. Yes, I know that this sounds too good to be true, but it isn't. For detailed information you can view my free report on "How to Become a Private Lender Earning Huge Returns" at http://www.aseasonedinvestor.com/PrivateLender-Report.html
This method of investing for passive income is very common in real estate circles and has been going on right under your nose in every city in America. Savvy investors have been utilizing this investment for years. In fact, there have been entire companies built around this investment, and those that have been used properly have grown in huge proportions. This is a very safe investment that produces high yields and at the same time provides security and liquidity. And best of all, it is a short term strategy.
Regardless of the economy, can you afford not to control your own investments? Does it really make sense to let a bank run your investments for you? They'd like you to believe that it does. Well, there is an alternative for you to consider, and that alternative is private mortgage loans. I'm not talking about giving long term mortgages. I'm talking about lending money to professional real estate investors who buy, fix and sell distressed houses such as foreclosures and vacant houses. You can loan money, secured by a first and only mortgage that will not only give you the safety you want, but will also give you the high yields we've discussed.
Security of your investments is becoming more and more important these days, especially with the huge losses experienced by many stock market investors associated with stock market investing, or other forms of investments that carry similar risks. This means that you have a solid REAL asset backing up your investment, unlike stocks, which are simply paper investments.
Recently, the collapse in stocks, banks and mega corporations was devastating to many Americans We have also seen brokerage firms themselves being investigated because of their buy recommendations for stocks of companies on the brink of insolvency. One can only predict that the woes of the bulls and bears will continue. If there was even a perfect time to consider investing in private mortgage loans that time is upon us.
Let's discuss both the pros and cons of loaning money on real estate. First, let's clarify what kinds of loans. I'm not talking about those high loan to value loans that banks and savings and loans made and are now in great financial trouble. What we're dealing with here are very low loan to value loans, since all properties are acquired at wholesale. By that I mean no higher than 65 to 70 percent of the value of the property securing the loan. And in many cases even lower.
Let me use an example to show you what I mean. A house appraises for say $100,000. Using this formula, you wouldn't make a loan for higher than $70,000. That's a 70% loan to value. Now, it's obvious why this is a much safer approach than most lending institutions. Banks get into trouble because they make loans at 90, 95, even 97% loan to value ratios. If this private mortgage loan were for the period of one year, you would be paid interest only monthly or quarterly. With quarterly payments of $2,625 at 15% per annum, your total investment return on the initial loan of $70,000 would be $10,500. If your current return is 3%, you now have a difference of $8,400 in investment income PROFIT.
What about five years? $70,000 at 15% would be $52,000. Now the difference would be over $40,000! In just 5 years! And all that is at only 15%. Many savvy investors get two and three times that amount!
For your security you will get a first lien against the property. You are the bank. You are in control. The real estate investor and their attorney will handle all the details including providing all the proper documentation to protect your interest, which includes a Promissory Note signed at the time of the investment by the investor, and a Recorded First Mortgage. Now, all of this costs you nothing. The real estate investor will pay all costs!
If you make a one hundred thousand dollar loan, you send a check for one hundred thousand dollars to the investor's attorney trust account, and you get a mortgage for one hundred thousand dollars, and the items I've just mentioned. Do you have to collect the payments? Absolutely not! The investor will set up your account in his office and mail the monthly or quarterly payment when due, or deposit it in your account. This can and should be a hassle free investment.
Is it a long-term investment? No. It can be almost any term you want. You're the boss. You can pick a term that suits you strategy for your investment. This investment is interest only for the time your money is being used. It's your money and it's your choice.
What if you want to liquidate? If you want out, it will usually take investors 30 days to replace your investment with someone else. Since your interest rate will be 15% or more, you will take no discount when you cash out. In addition, there are no commissions or "sales loads" taken out of your investment dollars, and you do not get charged any "early withdrawal fee" as do many banks. However, you really shouldn't make mortgage loans if you feel that you will liquidate shortly. But the option is usually always available.
Real estate investor's have learned that it's not the cost of money that counts, but the availability of it. Remember, you as a lender won't lend more than 65-70% LTV regardless. You're making a safe loan in all cases. You should never make a loan without a 30-35% safety net. If you don't violate the rule, be fully protected, and be selective you will always come out a winner.
Following some simple guidelines when making loans, your risks will be minimal at best. Making real estate loans is an approved and widely accepted use of self directed IRAs and pension plans. Think of it. Now you cannot only loan out money that has been unavailable for your use, but you can make it grow rapidly, even tax-deferred. Since Uncle Sam isn't taking a bite out of your profits until you draw out money, your money is left in the account to compound and grow. The results are staggering. You will be receiving interest on interest on interest, and it's all legal and approved by the IRS. In addition, many investors can direct you to securities entity, which would enable you to earn investment income, TAX-FREE, through the use of a Self-Directed Roth IRA.
I hope I have enlightened you on the awesome power of making real estate loans. If it appeals to you I can't think of a better time to get started than right now. There is a tremendous amount of foreclosures and bank owned properties that professional real estate investors are buying for huge discounted prices, borrowing money from private investors and both are making huge returns. While most people are complaining about the low rates that they're getting on CDs and other low paying investments, you could be receiving 15% to as much as 74%...and that's all the time, not just when you have a hot stock!
This is a very exciting investment strategy where I am also personally consulting and structuring deals with a small group of private lenders, who are getting up to 10 times the return of what they were making before! When they understand how and why the process works plus all the protection, they are eagerly waiting for the next investment.
Some investors use this strategy as a passive income for their retirement accounts, while others use it for a nice monthly income. And it's all short term with no long commitments. It doesn't get any better than that!
Glen Gallucci, also known as "A Seasoned Investor" actively buys, rehabs and sells residential properties. He has invested, renovated and built numerous residential and commercial projects during his 30-year career. A well diversified businessman; Glen is also engaged in real estate education. From the trenches, and with his down to earth "tell it like it is" teaching style, makes Glen the "real deal" and a sought after speaker around the country as his business experience proves invaluable for the beginner as well as the seasoned investor regarding the successful structure of starting a wholesale or rehabbing business as well as securing private lenders when investing in "quick turn real estate."