Frequently Asked Questions - FAQ
What Is Private Lending?
What Does It Mean To Become One Of Your Private Lenders?
When we have and want to borrow money against the equity in a property we own or a property we’re buying, we give our Private Lenders an opportunity to make us the loan… and earn high interest rates that are double or triple the rates you can get on bank CDs.
How Is The Money Used?
How Will You Be Using My Money?
As a Professional Real Estate Investor we need to fund new purchases, raise money to fix up, maintain and occupy our 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 unexpected cash needs.
Why Don’t You Just Use Banks?
Why Don’t You Go To Banks Or Mortgage Lenders?
Banks and other Lenders require applications, approvals and must follow guidelines imposed on the Banking Industry. Then there are limits to the number of loans they want to make to any one Company or Investor. On top of that, the time it takes for their approval process is never certain.
We can move much faster without these limitations by using Private Lenders. That allows us to negotiate more profitable deals while offering homeowners a quick and easy sale without new loan or deal breaking contingencies.
How Can You Afford To Pay Such High Returns?
How Can You Afford To Pay Double Or Triple CD Rates?
We make our money by providing valuable services to the Sellers, Buyers, Renters and Private Lenders we work with.
By cutting out the Middlemen, we can avoid the costs normally paid out for Real Estate commissions, Mortgage Broker Fees, Loan Fees and Property Management Fees.
We also know how to get full appraised value from our Buyers and avoid making price concessions. We can occupy our houses fast to avoid holding costs and we know how to fix up and maintain properties for less money than most people must pay.
We always formulate our purchase offers so that our Buyers and Sellers get a great deal. At the same time, we establish a minimum profit of $20,000 to $50,000 earned or captured between the time we purchase an investment property and sell it down the road. We just won’t buy a property unless it makes sense for everyone involved.
Help For Sellers
How Do You Help Sellers?
A lot of Sellers today are having trouble finding a Buyer when they decide to sell. And there are typically a lot of hassles a Seller must endure to get their home sold. Using a Long Term Buy and Hold investing approach, we can offer Sellers an attractive price, close or take possession whenever they want… and give them an opportunity to avoid all the hassles that traditional sales methods incur.
Help For Buyers
How Do You Help Buyers?
We offer several great programs and unique opportunities for Buyers. This includes our:
- No Qualifying Owner Financing Program
- Rent To Own Program
- Lease With Option To Purchase Program
- Down Payment Assistance Program
- Work For Equity Program
Buyers today are finding it more and more difficult to qualify for loans. Our programs help Buyers:
- Get into a home they want to purchase quickly…
- Allow them to start building equity for the future and…
- Help them avoid throwing their money away on rent.
Help For Renters
How Do You Help Renters?
Tenants today face more restrictive rules and application requirements laid down by Landlords and Property Management Companies. We have positioned ourselves to be very flexible and creative in getting good folks into our homes, thereby providing a much needed service. We can even rent to folks with bad credit and or who recently had a bankruptcy or foreclosure.
Aren’t You Concerned About Housing Prices Going Down Today?
We’re prepared to hold the properties we buy for 5, 10 even 15 years. That way we’re not as concerned about near 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. If we think a property may go down in value, then we make any adjustments needed upfront… before making an offer to buy.
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Rate And Term
What Interest Rate Do You Pay Your Private Lenders?
We currently pay between 2 and 4 times rates offered on 5 year, FDIC insured CDs. You can research nationwide CD rates by visiting www.bankrate.com and selecting the “CDs & Investments” tab. You will always know exactly what interest rate you will be locking in with us prior to making any investment.
How Long Will My Investment Funds Be Tied Up?
Most of our Private Loans are setup on a 3 to 5 year term. However it depends on what you want and need… and what we want and need. So depending on our plans for the property, we might be able to offer you a shorter term… or we may ask if you are willing to commit to a 10 or even a 15 year plan… if that is our preference. Regardless, you will always decide what term works for you on any Note you invest in.
Short Term Investment
What If I Don’t Want To Go Longer Than 3 Years Or Interested In A Short 1 Or 2 Year Term?
Then we’d have to wait for a special opportunity where that would work for both of us.
Early Pay Off
What If I Commit To A Longer Term And Then Need My Money Sooner?
Real Estate Notes are illiquid investments. However, our policy is to pay off (or replace) any Private Lender who requests an early payoff whenever we can. Sometimes a partial early payoff meets the Lender’s needs, allowing the rest of your money to continue to earn the high rates. We ask that you give us advance notice, preferable 90 days, so we can do whatever we can to meet your request.
We would attempt to meet such a request by refinancing the property, selling the property or, most likely, finding another one of our Private Lenders who would like to take over your position.
Similar to most other investments, it is very likely that there will be a fee to offset the costs involved on an early pay off.
Will I Earn Interest For The Entire Term Of The Note?
Your interest is fixed and locked for as long as the Note is out. However, we may sell or refinance the property before the full term is up. You will always earn your Note Interest until it’s paid in full. But we do have the right to pay off the Note early.
What If You Pay Me Off Only A Few Months After I Invest With You?
We understand that you might be liquidating investments or foregoing another investment program to get our high rates of returns. Therefore, we will agree in writing and spelled out in your Note, that you will receive a minimum of 6 months’ interest.
So if we needed to pay you off sooner than expected, we would either give you the opportunity to 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 in the event of getting paid off before the 6 months.
Choosing Your Payments
Will I Receive Monthly Payments?
In most cases you can receive monthly payments of principal and interest, or interest only. Interest only payments keep your entire initial investment working for you each month.
Payments Or Interest Accruing
Can My Interest Accrue And Grow If I Don’t Want Payments?
In many cases yes, but it depends on the deal. Sometimes we prefer to make monthly interest payments to maintain a protective cushion of equity in the property over time. However, on smaller Second Mortgages, we may prefer to let the interest accrue if that works for you. That way we can simplify our bookkeeping and at times avoid a negative cash flow.
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Private Lending For High Profits
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If I Want My Interest To Build Up Without Getting Payments, Will You Pay Me A Compounded Rate Of Return?
Yes! If your main goal is growth, then there’s nothing like compounded interest. The amount of interest you earn grows larger each month as the outstanding balance on your original investment grows each month. This can be quite attractive when it compounds for many years.
What Is Your Minimum Investment?
Our “First Position Private Lenders” usually need a minimum available to invest of $100,000 for most deals. However, there are some deals that come along now and then where a lower amount could be accepted.
Our “Second Position Private Lenders” usually need a minimum of $50,000.
We prefer to borrow at least $20,000 when working with our Private Lenders. If a deal needs less than that then it may be easier for us to just use our cash reserves.
Guarantee On Investment
Is Your Investment Program Insured By The Government?
No. There is no Government Backed Guarantee on these privately held Real Estate Notes. However, your main protection and security is the large cushion amount of equity in the Real Estate Property that secures the Note secured by a Deed Of Trust or Mortgage. With enough equity a Lender can use a legal or voluntary process of taking ownership of the collateral and then (if desired) sell the property to recapture the money invested plus any costs incurred in doing so.
IRS Approved For IRA
Has The IRS Approved Your Program For Retirement Accounts?
The IRS does not approve or endorse investment programs but they do establish guidelines that must be followed in order for you to invest in Real Estate Notes tax deferred or tax free using your Individual Retirement Account (IRA). You will need the services of a company approved by the IRS to act as your custodian to invest your retirement funds.
We have been pleased working with Equity Trust Company in Ohio (www.trustetc.com) and there are others like Entrust. We’ll be glad to answer questions about this and help you get setup correctly.
Loan To Value
How Do I Know If There Is Enough Value Or Equity In The Property To Sufficiently Protect My Investment?
It’s our policy not to borrow more than 75% of the value of a property using Private Lender money. That leaves at least a 25% cushion of equity. We will provide you with full details on the value, status and condition of the property whenever we present you with an opportunity to lend or invest in.
Do You Provide Title Insurance?
Absolutely! We never buy a property without Title Insurance. We will also buy you a Lender’s Title Policy if you get involved in funding one of our new purchases. However, if we are refinancing a property there would be no need for a new Title Policy.
Up Front Costs
What Are The Upfront Costs Involved In Investing With You?
It is our policy to pay for all the Closing Costs so that your entire investment goes to work for you. We will pay for the Closing Agent, Document Preparation Fees, Notary Fees, Overnight Mail Fees, Bank Wire Fees, Recording Costs and any other Fees Involved. We do not charge any fees or commissions to our Private Lenders whatsoever.
What Would Happen If The Property Burned Down?
We’ll always keep a valid Hazard Insurance Policy on the property to protect against causalities. You will be named as a Mortgagee and notified if the Insurance Policy was ever not kept in full force. Insurance distributions would be used to rebuild or repair the property, or used to pay you off.
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- Title Insurance
- Fire Insurance.
- Appraisal or Market Analysis.
- An Escrow Company to handle all the Legal Documents.
- And we never Borrow more than 75% of the value of the house.
We use Private Investors to fund the purchases of our properties. Your money is placed with us for a minimum of Three to Five Years (One to Two Years for smaller projects).
We are not Real Estate Agents, Real Estate or Stockbrokers, or a Mortgage Company. We are Private Real Estate Investors who buy several properties monthly using the funds of Private Investors just like you.
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Will My Money Be Pooled With Other Investors?
No. We do not pool funds. Your funds will fully fund one Real Estate Note secured by a Deed of Trust (or Mortgage, depending on the state) on a property with sufficient equity as protection.
What Is A Junior Lien Or Second Mortgage?
It’s a loan secured by Real Estate that is positioned behind a Senior Mortgage or First Mortgage. In the case of a default, a Lender can seize the property through a simple Deed Transfer or through the legal Foreclosure Process. Junior Lien Holders need to pay off or protect any Senior Lien Holders in order to protect their position.
Protecting Senior Liens
How Do You Protect A Senior Lien?
You can either pay them off in full or bring their loan current (making up any back payments if needed) and then making any other payments that come due. This helps to stop or prevent a Senior Lender from foreclosing, allowing the Junior Lender to foreclosure from their position.
Not Protecting Senior Liens
What Happens If I Don’t Protect A Senior Lien Holder?
If the Senior Lien Holder foreclosures then Junior Lien Holders could lose their secured position on the property, putting their entire investment at risk. This added exposure to a Junior Lender is why we offer a higher interest rate. Many Lenders are fine being in Junior Positions because they get higher interest, are protected by the equity cushion and typically have enough faith in the Borrower to take such risks.
If You Default And Don’t Keep All Your Promises, How Am I Protected?
We can’t make any guarantees but in the unlikely event that we were in a position where we could not keep our agreements, we could simply transfer ownership of the property to you if possible. You would own the property at 75% or less of its value, therefore making it easy for a quick sale at a profit. If we did not (or could not) transfer ownership, then you have all the legal rights of a Secured Lender.
The best way to legally protect your interest in case of a default would be to hire an attorney. They normally would seek to get your investment back, any unpaid interest, any collection costs, all your attorney fees and maybe even more. A legal representative could advise you if it makes sense to foreclosure or seek voluntary ownership of the property to protect and recuperate your investment.
If You Rent Or Contract To Sell The Property On A Lease Option Basis, And The Tenant/Buyers Trash The Property, What Happens?
We’re the property owners and it’s our responsibility to protect our property as well as to protect your collateral and of course... our equity and profit. We would fix it or take care of it and you should never have to get involved in such an incidence. It would only affect you if we were in default and you repossessed the property to protect your interests.
What Happens Next If I Want To Get Started And Become A Private Lender?
Once we know how much you want to invest and begin getting a higher rate of return on, and when those funds are available, and how long of a term you are willing to invest your funds for, we will begin looking for a deal for you. When we select one that meets your goals and investment needs, we’ll give you all the details on the property and then you can decide to pass or play.
People I Know
Can You Consider Working With People I Know Who Might Be Interested In Being A Private Lender?
It’s our policy to work with people with whom we already have an existing relationship, like yourself. I’ll also work with people they refer. In other words, I’ll work with people I don’t know, only if they are introduced by Referral. That means you can certainly refer potential Lenders to me. I’ll be happy to 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 our Private Lenders.
Learn How To Become a Private Money Lender
Becoming A Private Money Lender
Is Becoming A Private Money Lender Right For You?
Private lending is not for everyone, but if you are not earning the return you want on your investment dollars, you may decide that it is a good option for you.
Done correctly, private lending can double or triple bank rate returns, while still offering safety of principal. If you are not currently satisfied with the returns your money is earning, feel free to contact us to learn more about how Private Lending works.
How You Can Contact Us:
If You Have Other Questions... How Do You Can Contact Us?
You can call us at: (559) 821-1587
You can email us at: Support@REJVP.com
You can also visit our web site at: www.REJVP.com
The faster you get the facts you need, the quicker you can earn better than average, safe returns on your investment dollars!