RE CAPITAL GROUP www.RECapitalGroup.net PRIVATE LENDER PRESENTATION
Be The Bank! Become A Private Money Lender Invest In Real Estate For Guaranteed Returns of up to 12% Annually
What Is Private Money Lending? This is where an investor lends their money to a borrower for one or all of the following, related to real estate: • Acquisition (to include purchase and closing costs) • Rehab • Improvements • Costs related to management and holding of a property until resale of the property Any type of these loans are called Private Money Loans 3
Traditional Investing: The Difference THE TRADITIONAL INVESTMENT: • Most people try to generate a retirement income by letting people make decisions for them • By the time they need the money, they discover the money barely keeps up with inflation 4
Private Money Lending • Wealth with passive investments secured by real estate offer a safe and very attractive return • As an investor: Think of this like holding a Bank CD 5
Private Money Loans • Decisions on the borrower are based on the value of the collateral, not the borrower • This makes the investment safe and passive 6
How Private Money Loans Work: • The Investor (you) provides a direct loan to a real estate investor • You lend your money to buy / rehab/ improve a Residential or Commercial property • The loan is be secured by: - A Trust Deed on the property (as a short term 6- 12 month “Bridge Loan”) 7
In our opinion, • Private Money Lenders should only lend to borrowers who want to buy and sell a property (flip it) for profit as these borrowers are in business to make money and are not emotional about the property • Private Money Lenders should NOT lend to owners/occupants 8
• You’ll lend money short term to the borrower and charge the borrower interest for the use of your money they will use for the purchase and rehab of the property • The percentage you charge is interest earned by you! • This interest stays stable and never changes like the stock market 9
Replace The Bank: • If you have CD or savings in a Bank, you are letting money lie around in a very low interest rate bank account • Why not turn the table on the bank? • W hy don’t you become the bank? 10
HOW IT WORKS IF YOU ARE SENDING CAPITAL DIRECTLY TO ESCROW Escrow Cuts A You, The Lender Third Party Escrow You Transfer Money To The Check To Your Escrow or Title company When Borrower For Investors Escrow The Buyer (Your Borrower) Rehab & Closes Escrow Holding Costs Escrow Holds The Closing Costs & Title Fees And Pays Out The Sales Commissions Escrow Instructs The Escrow Cuts A Check Title Company To File Directly To The Seller For A Trust Deed (Lien) The Purchase Amount Against The Property In The Lender’s Name At Close Of Escrow Upon Resale Of The Property, Funds Go Directly Back To Lender For The Amount They Lent For The Project – Plus The % Of Interest They Charged The Buyer The Buyer Rehabs The Property And Resells It
Private Investor Q & A: #1. Can I use an IRA or 401k to make loans or invest in real estate? • YES! It’s your IRA, its self directed • It is easy to accomplish and it’s only a matter of moving it to an administrator of your choice 12
HOW IT WORKS IF YOU ARE USING A THIRD PARTY ADMINISTRATOR Third Party Administrator You, The Lender You Transfer Money To Third Party Administrator FBO Your New IRA Account At Closing The TPA Funds Go Transfers Back To TPA Your Money FBO Your From Your IRA Account IRA Account “Tax Free” To Escrow Escrow Cuts The Check Directly To The Investor Investors Escrow Upon Resale Of Property Funds To Lender Go Directly Third Party Escrow Back To Escrow 13
Making Loans with an IRA • This is not a rollover with penalties from the IRS - It’s merely a transfer from your current administrator to another Making Loans with a 401k • If you were to leave your job, the 401k would transfer to an traditional IRA -Then you can take control of the funds to start making private money loans 14
#2. Do I have to have a license or something to be able to loan out this money? • NO! These loans are a security so you’re not going to need a license or have to register with the SEC 15
• Only when loans are pooled does it become a security that needs a license. • Only when loans get pooled or loaned out by multiple investors does it become necessary to have a license (there are exceptions to the SEC rules that you can fall within to pool your capital with others ) • Of course you can stick with each individual loan where you are completely 100% in control 16
#3. Do I have to do all the paperwork? • NO ! The Escrow company, Title company or Attorney prepares all the documents for you and gets your borrower or investor to sign them. •If you’re making a loan, they can record the documents for you that need to be recorded (some do not get recorded). • In this case, you would not cut the check directly to the borrower, they would do this for you! 17
• The real estate closing would be done by your agent (escrow company, title company or real estate attorney), depending on your state • The real estate closing agent would be responsible to receive your funds and make sure all the documents are in place to secure your investments before they close! 18
#4. Do I know what documents I need? • Don’t worry, your escrow, title company or attorney will handle the documents for you • Always seek help from these professionals • Make sure the following list is always complete and all documents are there at the time of closing or no funds get released! 19
Documents for your security • Titled Insurance issued at closing naming you, as an insured along with the investor • Fire insurance with you on the policy, as an insured • The original note and a copy of the mortgage or trust deed (the document that is recorded) will be given to you * Don’t worry - All the documents will be mailed to you by the closing agent 20
#5. Can this be a long term investment? • That is up to you and the borrower or investor • Most loans are short term, repaid to the investor within 6 months-1 year • Whatever it takes to meet your and the borrower or investor’s needs, and your investment plan After all, you’re the bank! 21
#7. Is real estate a safe investment? • If you apply common sense and don’t break the rules, it’s as safe as any other high yield investment • Private Money Loans in real estate are generally safer and generate higher returns than the stock market or the rates you would receive on a Bank Certificate of Deposit account 22
#8. Stock market VS Mortgage loans Stock Market • Y ou’re betting on companies you know little about and the volatility of the market is out of your control • Everyday you’re wondering whether you’re gaining or loosing Mortgage Loans • With a loan y our return is fixed and won’t change regardless of whether the market is up, down or sideways • Your loans are secured by real estate 23
Remember, YOU become the bank! • When you make a loan, you receive your return and there’s no guess work • You determine the interest rate – and the rule is: the longer your money is tied up, the more interest you receive Examples: ▪ lend money for 6 months and receive 6% interest ▪ lend money for 9 months and receive 9% interest ▪ lend money for 12 months and receive 12 % interest At the end of the term, you can take your principal + interest OR you can take your interest only and let the borrower keep your original investment to put into their next deal, earning you more money 24
Build Your Wealth: • Private Loans are great investments • They are safe, with high returns backed by real estate • You are not a slave to the ups and downs of the stock market and you can reinvest to make continuous returns • Remember, YOU get to look at the deal and agree to the rules or you don’t invest • You owe it to yourself to check it out and give it a try! 25
Thanks For Viewing Our Presentation RE CAPITAL GROUP www.RECapitalGroup.net If interested in this investment opportunity, Contact: Cheryl Gollnick (951) 318-6420 cheryl.gollnick@recapitalgroup.net
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