Closing on a property purchased with private lenders

Closing on a property purchased with private lenders

When you make your offer on repossessed homes for sale, there should be no paperwork involved, just a verbal commitment. Once your offer is accepted, you need to move forward with the mound paperwork that is your passage to closing.

When you are working with the realtor on cash deals, the realtor will take care of the closing preparation for you.

If you’re purchasing a bank repo houses, you’ll be working with an asset manager. Once your offer is accepted, one of the first things they will ask you for is earnest money. You have to put some money down. Normally, I try to get by with $ 100. Sometimes this flies, a lot of times it doesn‘t take off. Often these folks are looking for $ 1,000. I had heard a rule somewhere that you should never give more than two percent. I don’t know if that’s valid, but it’s what I heard.

I probably shouldn’t be so open about what I am about to tell you, but I am going to tell you what I did on one deal. I made an offer and it was declined.

I thought I could buy that particular property at that particular price. This was back when I touched the private lender’s money; I don’t do that any more. I had the private lender’s money in my bank account. They turned me down and the next day. I went back in with my exact same offer, to the penny, that they had turned down on the day before. But, this time, I gave them 100 percent of that offer as the earnest money. They took it. I had a substantial reduction. They wanted this amount, I offered this amount, I low-balled the thing and they turned me down. So I just put up earnest money to the full amount of my offer. And they took it.

I don’t play that risky game now but, I did back then.

Now, the asset manager and your realtor will coordinate paperwork as well as schedules to determine the date of closing. Contact your lender to arrange for a transfer of funds at this time. You also need to set up insurance, both hazard and fire.

It is important to note that if you’re dealing with a bank, they are going to ask for protection of their loan. Private lenders don’t do that because they assume you know what you’re doing and you take care of that.

At this, it would be easy to slide by and forget insurance. That’s why you’ve got a check sheet. I am going to keep drilling the idea of check sheets into your mind. It is easy to forget things during this process.

It would be a nightmare to be at a closing and remember that you haven’t lined up your insurance. Check sheets are the way to avoid this nightmare.

On bank repossessed homes, you get 60 days to close.

Often, I have a lot of houses in process and on rehabs. They’re in the pipeline with offers accepted on them and my contractors can’t keep up. Do I really want another house on top of all of this?

We can start to get overloaded, say I buy 17 houses in two months. This is a lot of work. I can actually use this 60 days as a tool.

If the offer’s accepted, I push things back to the 60 days. If I’ve managed to keep things flowing without working my people to the bone.

If my crew picks up the pace during that 60 days and gets the work done, I can pull that date in. I will call and say, “Hey I’m ready to close.”

That 60 days they give me, is a great tool for me. I can use it to buy time if time is needed.

E. Alan Cowgill is the owner of Colby Properties, LLC. and President of Integrity Home Buyers, Inc. Since 1995, Alan has bought and sold hundreds of single family and/or small multi-family investment properties in Springfield, Ohio. Alan uses Private Lenders, not banks, to fund his real estate purchases. By doing this, he has created his own private bank of ,000,000 in funds. Alan looks for situations where the seller, the lender, and the eventual homeowner can all “Win”. He is not a Realtor, but a Private Investor, author, consultant and national speaker. He has been asked to speak on the topics of ‘Investing for the Beginning Investor.’ and ‘Finding Private Lenders.’ His home study system, ‘Private Lending Made Easy’, shows new and seasoned real estate investors how to find private lenders for their own real estate business.

His website is http://www.supercoolsystems.com

Using My Self Directed RRSP Portfolio to Invest in Private Mortgages

Using My Self Directed RRSP Portfolio to Invest in Private Mortgages

 

Quite often real estate investors prefer to skip traditional mortgages and borrow money from private lenders. Skipping the government controlled and regulated lending options gives a borrower much more flexibility, they typically receive their funding much faster and there is little to no red tape to jump through. Perhaps best of all, the loan doesn’t affect their credit score.

Why would you want to invest in private mortgages?

Private mortgages are a great way to receive a high return on investment, typically much higher than what you’d receive in a standard mutual fund. They also provide significantly less risk than investing in the stock market – we’ve all read the headlines and hands shaking checked the status of our retirement account only to find that it has bottomed out. No matter what age you are this is a terrible experience, to lose all of that hard earned month. However as you approach retirement those pains are felt much more intensely. All the while you’re still paying the investment bankers their fees even though you’ve lost your money.

Private mortgages offer less risk because you’re secure in both the borrower and the value of the property. Typically the lending to value ratio is 50-70%. That means you only lend 50-70% of the value of the house.

Each monthly payment is like a fixed income payment. Each month you receive a check, or two or three depending on how many investments you make.

Finally, investing in private mortgages with your RRSP funds means when you withdraw the money upon retirement you’ll be paying significantly fewer taxes.

Think about what you’ll do with all that extra cash in your pocket. If you’re making monthly payments into your RRSP you can now keep that money for your monthly spending needs and use the income from your investments to fund your retirement.

Using your self directed RRSP portfolio to invest in private mortgages will be the best financial decision you ever make. Instead of assuming the risk, fees, and less than desirable return on investment that mutual funds, stocks and bonds offer you will receive a secure monthly fee at a much higher return on investment. All it takes is a little understanding about how to analyze opportunities and draft agreements which benefit your pocket book and help others achieve their real estate dreams.

 

For more information about how to use your self directed RRSP portfolio to invest in private mortgages visit http://www.rrspmortgageinvestor.com

Walter Monteiro.

Real Estate Sales Representative and Mortgage Agent.

Cambridge Ontario.

Using My Self Directed RRSP Portfolio to Invest in Private Mortgages

Woman ‘jet hikes’ across country riding in private planes

Amanda Nolan is trying to reach all 50 U.S. states catching rides on private planes (Facebook)

Amber Nolan ’s story might not sound all that original at first. She’s attempting to hitchhike around the country. But this is what sets her journey apart: Nolan is traveling to all 50 states “jethiking” by private plane .

Nolan, a travel writer, started her journey in July 2012 and only has eight states to go before completing the unusual voyage. She’sbeen chronicling her journey on the Jet Hiking blog, and on her Facebook page, where she logs each of her stops along the way.

“As a travel writer, I've been all over the world but I hadn't seen much in my own backyard,” Nolan said in a recent interview with the Daily Mail. “I wanted to experience the United States in a unique way and started brainstorming ideas.”

She’ll have officially knocked out all 50 states once she’s able to hitch a ride to Alaska, Hawaii, Utah, Kansas, Oklahoma, Missouri, Illinois and Indiana. Most of the states on that list are clustered next to each other, so it’s entirely possible Nolan could wrap up her quest before too long.

Still, the trip has been far from easy.

“I spend hours and hours contacting people,” Nolan said. “I'll go to the airports and tell people what I am doing and wait around - and sometimes it is days before I find someone heading the direction I am.”

She’s even run out of money along the way, taking temporary jobs in some of the 250 towns she has visited along the way until she has the funds, and a ride, to head out on her next leg of the trip.

Interestingly, Nolan is not a pilot herself but said she would like to get her pilot’s license once her journey is complete. And she hopes to inspire other travelers around the world to consider her experience as a viable alternative to typical hitchhiking and couch surfing ventures.

"I think an organised ride-share system between pilots and travelers to cut costs on both ends could make this a reasonable option for travelers with a limited amount of time,” she said. “I definitely recommend visiting a local airport or flying club and seeing what the general aviation side is all about."

View the original article here