Would You Like Returns of 15-20% Or More And Make Money Just Like Banks Do?

Are you tired of seeing your IRA and other investment accounts deliver roller coaster-like returns with you having no Control over how they perform?

Do you want to capitalize on this historic foreclosure market, but don’t want to get stuck with the “risk” of having to be a landlord… or worse off having to fix toilets in the middle of the night?

If you answered yes, then this will be one of the most important and exciting articles you’ve ever read.

In the following article I’m going to pull the curtain back on a strategy that smart investors have been using for hundreds of years to make great and more importantly safe returns on their money… namely through Private Money Lending.

I’ll also show you how my private lenders are making an absolute killing off of me, while being in control of both their returns and their risks… and why I actually consider it a win-win when they do.

First Things First…

If you’re not consistently getting big returns on your current investments such as your IRA, Savings Account, or other investments you’re about to learn a smarter way to invest in today’s market. (Especially in today’s market.)

This method has been used in real estate and has been used successfully for years by a few very savvy investors who can make money like banks do. And trust me… the surest way to make money in this country is to “Be the Bank”. Wouldn’t you agree?

If you have funds to invest but know that the stock market and other traditional investments are not the safest decision right now, consider the world of private money lending as a smarter investment tool.

Private money lending (also known as private mortgage lending) could offer you a much higher rate of return, from 10% - 15% and backed by a tangible asset--real estate. The best part is you make the rules when it comes to terms and interest rates, so you have control over how your money is being invested.

And having control over your money is good for your money and good for you. Does that make sense?

Your borrowers are real estate investors who come across great deals at deeply discounted properties, and they need to fund the purchase fast or risk missing out.

These properties are often in need of repair for them to sell at a great profit. This is often called a “fix and flip”.

These investors cannot go or choose not to go with traditional lenders for various reasons. Instead they choose to use private money from lenders who understand the real estate business and can fund deals quickly.

Because they need funds quickly and for often a short amount of time these investors are more than happy to accept loans with larger interest rates and terms that favor the lender (and you are the lender).

This works out to your advantage because now you take profit in today’s all time low real estate market without leaving the comfort of your home. In this situation you are the bank – and they have all the big buildings for a reason.

You are lending money just like a bank would and your money is in a tangible asset. Plus, investors only need to borrow around 60-70% of the property’s after repaired value (ARV) to fix up a property, so the worst scenario is your borrower defaults on the loan and you have a deeply discounted property.

And I’m going to show you how you can actually control that risk.

Since you choose who borrows from you and can decide whether or not to lend for a particular house this could work out in your favor.

Because you are only lending out a maximum of a 70% loan to value ratio there is a good layer of equity to work with if you ever need to sell yourself.

Traditional banks are getting in trouble these days because they are lending out up to 100% of the homes value and have no way of getting out of the deals themselves when they go into default.

Now I want to be clear about something and this is very important:

These days the term “real estate investor” is such an ambiguous one. And you’ll sometimes see people who’ve bought one home all of a sudden calling themselves an “investor”.

And like many things in life, not all “investors” are created equal. You’ll often find that about 20% of those in an industry are responsible for 80% of results.

And your job as a Private Money Lender is to identify that 20%, and separate those out from the 80%.

In other words you want to make sure you’re dealing with a real, seasoned professional. But don’t worry, I’ll give you some tips later on how to identify a true “real estate investor”… and more importantly what to look out for!

Many of these investors only need to borrow for short periods of time to fix and resell or refinance. They do not need long 30-year mortgages.

Therefore your capital can work for you in short periods at a much higher rate of return than a traditional investment of that same time period.

In fact, it’s up to you to decide if you want to invest in a particular property. The only decisions you really need to make is if this is where you want to put your capital. You then agree to terms with your borrower.

To make sure this process is smart you’re going to want to make sure an attorney or title company, or escrow company handles all the paperwork on your behalf as the closing agent.

The good thing about this is traditionally you can have the borrower pay all costs involved out of the proceeds. Never sign a check to the real estate investor yourself, make sure this is all done through a professional third party to handle the closing.

To further protect your investment you’ll also want to make sure the real estate investor gets title insurance and property insurance with your name as the “loss payee” to protect your investment.

After closing and you have provided the funds, the closing agent will send you all the paperwork including the mortgage or trust deed with you in the first position.

This is a smart investment and can also be used to earn high returns for your retirement plan to grow tax-deferred or tax-free using a self directed IRA.

As a private money lender you have your money working for you in your control, growing your money in a way most people don’t know exist.

While others are complaining about the current economy you can take advantage of this boom time for real estate investors offering short term loans and high rates for consistent high yields on your investment.

And if you’re using a self-directed tax-advantaged plan (like that of a Traditional or even better a Roth IRA) your huge returns can go straight into “Hip National Bank” without Uncle Sam taking his cut.

We’ve taught a number of our private money lenders how to do this, and they loooooove when April 15^th rolls around these days… and you will too if you learn this powerful strategy.

And if you don’t qualify for a Roth IRA because of income restrictions… 2010 will be your best year ever.

So now that we’ve covered some basics, let’s talk about what Private Money Lending is. I’m going to assume you don’t need me to explain the benefits of investing in real estate… you’re already on board and just need a smart strategy to get involved.

What Is Private Money Lending?

First off let us start with some definitions.

What is private money lending? Private money is a very common term used in reference to the act of lending money to a company or individual by a private person or organization.

This is very useful to people and organizations that have non-traditional qualifying guidelines.

There are higher risks associated with private money lending for both lender and borrowers. And there are ways to “control” or mitigate those risks.

There are also a lot less restrictions, and qualifications are frequently done with a conversation and a handshake between lender and borrower (That and really good paperwork outlining that handshake to protect both borrower and lender).

This is an age-old way to purchase real estate. It is very lucrative right now because single-family homes and investment properties are at an all time low in price.

A couple years ago, you would have to invest thousands of dollars in rentals just to make them cash flow. Now though, an REO, short sale, and many a motivated sellers are available for those smart enough to see the opportunities.

The hard part right now is being able to get a bank loan. Banks want to see at least 20% down and you have to have excellent credit, traditional employment, and no longer are there No Doc Loans for those people who are self-employed.

Also if the property you want to purchase has any problems, FHA will not loan on it. You have to go conventional then the rates are higher, and more money is required down.

For those of us that usually invest our money into the stock market, this time also opens up a golden opportunity to instead invest in real estate by being a private money lender.

It is not nearly as difficult as it may seem on the surface. Think about the last month of your life. Have you come into contact with someone that was thinking of buying a house, or talked about refinancing their mortgage? That is one of the best ways to find the properties and people you want to invest in.

For those of you who would never lend money to their friends and family don’t worry there are plenty of opportunities to invest and remain unknown to the borrower.

A Case Study

If you know today’s current real estate market and lending situation you can probably guess the frustration, and heartache of buyers trying to conform to the bank’s frequently unusual and confusing list of rules and regulations.

Here’s a perfect example. Let’s call her Carol

Carol is an excellent investor. She has worked at the same job for 10 years, in the same field for over 20 years.

We were close to wrapping up a Short Sale with the bank. Let’s call them “Tank of America”. When Carol went to “Tank of America” to get them to do the loan on the property, who are stringent on their guidelines, she was an instant approval.

Unfortunately the house was not. It was built in 1987 and was lacking a crawl space and vapor barrier underneath it, along with many other small easy fixes in order to qualify for a loan.

It was the only house in the town she grew up in, which she could afford.

Just about this time she sold their huge out of state property to downsize into a residential home in California. They had made some money on the deal and wanted to invest it.

They arranged to tour the home Carol wanted, thought it was cute and a very good investment.

They knew their investment of $900,000 would go to purchase the property, for $700,000 and $20,000 would go to repairing the property up to bank standards.

They agreed to a 5 year balloon payment and interest only payments of $2565. Six months later Carol completed the required work and is enjoying a wonderful house.

She was smart and made the changes before she moved in. Now the house is completely ready to refinance into a traditional loan. Not only did she get an incredible deal with built in equity, but her “investors” are making lots of money!

Now what is the worst-case scenario when it comes to being a private money lender? Well it would be that the borrower stops paying the mortgage and you are stuck with a property you don’t want and now have to pay for every month.

The good news is, most borrowers come into the deal with some money invested. When you are loaning on these properties, keep the loan to value in your favor, so if you needed

too you could hire an agent to take care of selling it.

It’s probably a prudent idea recommendation to not loan more than 70% loan to value.

For instance, a home that is currently on the market for $1,000,000 may be worth $1,200,000 but the property is a short sale and requires new paint, new flooring and needs a general clean up.

The cost of paint, flooring and cleaning comes to $20,000. So if you paid $1,000,000 for the property and have invested $20,000 for repairs, you have $980,000 worth of equity.

If you had to put that house on the market now you could sell it for $1,200,000, which gives you $220,000 to pay an agent and cover utilities.

Remember also because you improved the property, your agent might recommend raising the price to reflect those changes. It is amazing what completely painting a house inside and out and general clean-up can do. It makes a home clean and ready for a new buyer.

There are some important things to look out for when choosing your investment property, and important steps to take when choosing a borrower.

When Investing Your Hard Earned Money Follow the Golden Rule: He Who Has the Gold… Makes the Rules

Follow these rules to be successful with your investment.

• Must have instant equity. Make sure the property has plenty of room between value and price. Value is a pretty tough word to get out these days, so you want to have enough wiggle room that if your investor is wrong… you’ll still be protected.

You must protect your investment money, avoid risking it on a property priced at or above the market value, it is not worth the risk.

True you will be paid well in interest, still if you do NOT want to manage a rental, choose properties that can easily be re-sold.

• You must have a clear and concise plan of action and a good attorney!!! Put everything involved in the deal on the loan papers. If the borrower is required to put a certain amount of the loan into fixing defects on the property, include

these requirements on the loan documents and specify the date the work is to be completed.

If the borrower fails to complete the work put in the ramifications, a late charge, spike in interest rate, you can even go as far as calling the loan due and payable.

If the borrower is not able to come up with the whole amount you can foreclose and take the property back citing specific performance.

This business and good business period is built on good relationships. But my point is to keep excellent track of who is supposed to do what in the transaction, and make very sure it is clear and admissible in court.

You want it clear enough you can show a judge and they will understand exactly what was agreed to. And having things in writing is just good business too.

• Must be able to be financed by a traditional mortgage broker or directly from a bank. It is ok if you finance a property that needs work. In fact that is one of the best ways to get an excellent deal.

It’s highly recommend though, doing any large jobs before the renter or end-buyer moves in. For instance if the investment needs a foundation, that is not something that can easily be done later and is required for a traditional mortgage.

Make sure and factor that in to the deal. If the property needs paint or general clean-up don’t worry about it. The borrower will paint and clean as they go, and would probably need to be done before sale anyways.

Anything big that needs fixing, fix it first! You don’t want to be needing to sell and only able to market to other investors, keep the owner occupied market open.

Not only will you be more likely to resell the property, you will get a much better price.

• Don’t let your emotions get in the way! If you are going to be a successful Private Money Lender you need to remember that this is a business built on NUMBERS.

And the only numbers that matter are the comparable sales, comparable listings, and the amount of money you are making on the deal.

Don’t let attachments to the house or the borrowers get you into financial trouble.

It is NOT worth it for you or them.

• Always use an escrow officer!! We can’t stress this enough. For the couple of hundred dollars it will cost you, not only will you have a professional handling the closing of your investment you will have title insurance!

Then you can be sure the property you are buying has a clean title, doesn’t have past liens or encumbrances, and all the paperwork is structured exactly how you and the borrower have agreed upon. Then there is no confusion.

• Always use a neutral party to keep track of payments made. An escrow company usually has the option of having all payments the borrower makes go into an escrow account, then are released to you either on a set schedule or can be accumulated in that fund, which ever you prefer.

It is very cheap usually under $5 per month, and it keeps everybody on the same page.

Finally, Make sure you review all of this, even this report with an attorney before making any financial decisions. Laws and restrictions are changing all the time, so make sure you get the latest information with a qualified local attorney.

Rules To Follow When Selecting A Borrower:

Follow these rules to be successful with the person you choose to invest in.

It is true if the borrower should default you have security because you will then own the property.

It is also true repossessing a property is a huge hassle and very time consuming.

By using these simple techniques you will stay out of a courtroom, and still make lots and lots of money for you time and investment.

• Know your borrower. At least the basics. I told you I would give you some tips to finding true “real estate investors” and this one is HUGE.

What kind of experience do they have, can they document their experience, do they have testimonials from happy investors… and the big question – Do they have “skin” in the game?

Look if they aren’t putting any of their own money into the deal it’s only because of two reasons:

1) They don’t have any money (Which ought to tell you something)

2) They don’t want to risk their money (Which also ought to tell you something)

If someone isn’t willing to put their money where their mouth is, in my opinion they have no business giving others advice on what to do with their money.

Now this isn’t a silver bullet to discovering whether you’re dealing with a serious real estate investor or not… you still have to do your due diligence – but this one tip alone will tell you a lot about the deal, the person, and whether you have a real professional on your hands or not.

I don’t focus too intensely on credit, but I always recommend to my clients to do a background check on the borrower.

You can pay for one using the internet or go down to your local courthouse for free and do a local check.

Anytime they have been sued in that county, it will be on the background check. This holds a lot of weight when it comes to the decision of whether to invest in this person or not.

• Know their plans for the property. If they plan on flipping the property, I like to include a provision they provide me with a detailed plan of how they intend to accomplish this goal.

And exactly what they plan to do if after a certain amount of time on market the property does not sell. Are they willing to be landlords?

If not how do they intend on paying the mortgage to me every month?

Very important questions to be answered, and if they lack the necessary knowledge to respond to these questions with a well thought out and precise answer it is better not to invest with them.

You will end up doing most of the work because they lack the expertise to do so.

Remember there are lots and lots of opportunities for private money investors to make money through real estate… And there is NO Reason to risk your money unnecessarily.

So Remember… When it comes to being a Private Money Lender stick to the Golden Rule – He Who Has the Gold… Makes the Rules. And Since You Have the Gold – You get to Make the Rules!

Each of these tips can be summed up in one word… CONTROL. You’ve worked hard to build your investment capital haven’t you?

If you wanted to lose control over your money you wouldn’t need to consider Private Money Lending… You can use other investments and not have any control.

This is a strategy that puts control over your money, it’s returns, and it’s risks back into your hands. Now that’s a refreshing thought… isn’t it?

By following these simple guidelines you will be very successful being a private moneylender.

ABOUT DYNASTY WEALTH PROPERTY SOLUTIONS

Finally, we often get this question. “Who are you? What do you do and how are you qualified to give me this information?”

Well that’s a very fair question. We’re professional real estate investors and a capitalized private investment partnership. We specialize in commercial and residential investment, real estate, and investment real estate solutions.

We’ve been in the real estate business for over six years. We’ve been successfully negotiating short sales for over three and we’ve got over 25 years of real estate experience.

So unlike some other people who started coming into the business when foreclosures became in vogue, we’ve been in the business for quite a long time, this is our full time business and we have many successful investors that we’ve had the good fortune to make a lot of money for.

We don’t have day jobs and do real estate investing in our off hours. This is our business. This is what we do for a living.

We are Orange County’s Only Accredited Luxury Home Short Sale Specialists™ and we’re also the winner of the 2008 Southern California Foreclosure “Outstanding Professional” Award given by the Foreclosure Professionals Institute of Southern California.

If you’d like more useful information, including all the latest tips, tricks and strategies to being a successful Private Money Lender visit our blog at www.ocluxuryhomeshortsalespecialist.com

You can also Friend me at www.facebook.com/gabriel.k.anderson

And to get the most recent updates on new real estate best practices that are working in today's market, follow me on Twitter at www.twitter.com/gabrielanderso

Or if you’d like to contact us directly, or find out more about us and what we do, you’re more than welcome to visit our website. You can do so at www.putyourcashtowork.com or you can just call our office directly, 949-205-4695.

I hope the information that I shared with you was of extreme value and I wish you the best of luck with becoming a happy and successful Private Money Lender.

If there’s anything that we can do to help, just give us a call or send us an email by logging on to our website and we’d be more than happy to talk to you.

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