What Are the Five Most Important Aspects for Borrowing Private Money?

By Dave Dinkel

Private money lenders are individuals who are looking for a better yield than Certificates of Deposit or what they can get in the stock market and its associated risks. Even if the private lenders don't' ask for these basic requirements to make their loans, the investor should supply them anyway to protect himself.

In the final analysis, private lenders base their decision on the credibility and trust they have in the investor asking for the money. The professionalism displayed by the investor asking for the funding goes a long way toward making the perspective private money lender agree to loan money.

In the vein of providing the private money lender with what he needs to be comfortable loaning the money, the investor should at least provide -

1. Promissory Note - this is the document that "proclaims" that the lender is due a certain amount of money and the terms at which the funds were loaned. These terms include the interest rate payable for the money, how often the interest is paid, any principal payments and how they are paid, when the note is due and payable in full (expiration date), terms for default, who is responsible for the note, the collateral that secures the note and other terms and conditions agreeable to by the Mortgagor (borrower) and the Mortgagee (the lender).

2. Mortgage - this is the document that is recorded in the public record that "proclaims" to the public or the next buyer that the property is encumbered by a Promissory Note. This document can be recorded in the public record with or without the Note attached but generally the Note is not recorded.
3. Property Appraisal - to avoid the accusation that the lender loaned too much money for a property, an appraisal by a licensed appraiser should always be secured. This does not mean the real estate market can't correct and the property's value becomes less than the amount borrowed, just that at the time of the loan, the market value was independently established.

4. Title Policy - whether this is a new purchase or a refinancing, the investor should get a title policy for the private lender. This is to insure that the title to the property is clear and marketable. A marketable title is very different from an insurable title and has no encumbrances or defects. An insurable title can be issued by excluding these defects from the coverage of the policy. The title is much more important than the condition of the property simply because construction can fix physical defects, while title defects may make the property unsalable.

5. Insurance - Once the money has been committed to purchase or refinance the property, it is immediately imperative that the property be insured by an insurance policy for hazard, fire, windstorm (where applicable), flood and liability. This coverage is extremely important to protect the lender's money in the event something damages or destroys the property or there is a liability law suit brought against the owner.

In summary, if you are going to solicit to borrow money from friends, family members or anyone that will loan you private money, it is absolutely necessary to provide them with the five items above. The costs of these items (mortgage recording, closing costs, title insurance, prepaid insurance premiums, and appraisal) can be financed into the loan amount initially, however, the insurance must be paid when due to keep it in force. Providing these items will help cement the fact that you are a professional and looking to protect the lender's money.

By the way, if you want to learn more about taking advantage of the gold mine in REOs, check out this free 100 page e-book at: Secrets of the REO Market http://www.crushingthereomarket.com/ If you would like to have a huge buyers list to sell your properties to take a look at - Creating a Massive Buyers List in Days not Months http://www.makingabuyerslist.com/ Article Source: http://EzineArticles.com/?expert=Dave_Dinkel

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Article Submitted On: December 04, 2010

Packaging Your Project For Your Private Lender

By Jack Rogers

You have found a private Investor who has agreed to consider funding your first Real Estate project. The investor has informed you that he has to be very comfortable with the deal and is utmost concerned that his interest is well secured at all times.

So, let's say that you have located and negotiated a purchase price on a vacant Single Family Residence (SFR) that needs considerable fixing-up. Let's take a look at some of the details.

1. The house has 3 bedrooms, 2 baths and has approximately 1400 square feet of living area plus a 2 car garage.

2. You have done your homework and based on comparable sales the house, after it is put back in good shape, should sell for approximately $75.00 per square foot of living area which computes to $105,000.

3. You have negotiated a purchase price of $35,000. You have also received bids from three different contractors to complete all necessary repairs in order to make the house totally ready for the resale market. The average bid comes to $21,000 or $15.00 per square foot. The estimated time to complete the repairs is one month.

4. Because of current resale market conditions being slow, you are considering offering Owner Financing. Having met several Note Buyers at The Real Estate Investors Association Meetings, you determine that if you financed the sale yourself, you could expect 80% to 85% on the dollar of the face amount of the Note if you sold it for cash.

5. Financing details and costs- Your investor has agreed that if he/she finances the deal for you, he/she will give you a 6 month loan at 10% interest which can be paid along with the principle due in six months. If for any reason the investor extends the loan he/she will charge an additional 2% of the loan balance.

6. Let's summarize your anticipated costs to determine if this project would appear to be profitable:

Purchase Price......................................$35,000
Fix Up (Rehab) Costs...............................$21,000
Hazard (Fire) Insurance.............................$600
Title Insurance For Investor.......................$625
Appraisal Fee............................................$300
Other Purchase Closing Costs.....................$300
Interest Expense.....................................$3,000
Miscellaneous Expenses...........................$2,000
TOTAL...................................................$62,825

The investor will also require a minimum of 4 months interest, even if you sell the property earlier than that. This will reimburse him/her with cost & inconvenience of transferring funds from other sources.

7. Now, let's look at your anticipated proceeds from your resale. You may be able to sell the house to a buyer who can qualify for a bank loan: however, let's look at a worse case scenario and anticipate that you will finance for the buyer and sell the Note:

Sales Price...............................................$105,000
Down Payment.........................................$10,000
Note back from Buyer payable at...........$95,000

$697.08 per month including 8% interest amortized over 30 years

SUMMARY
Cash Down Payment................................$10,000
Sale of Note (80%).....................................$76,000
TOTAL CASH PROCEEDS...........................$86,000

Less
Closing cost to sell*....................................$9,000
Pay-off loan..............................................$60,000
6 months interest......................................$3,000

TOTAL.......................................................$72,000

*Closing costs include Real Estate Commission of 6% of Sales Price which you won't have if you sell the property yourself, which you should do.

NET PROFIT..............................................$14,000

Also other things to consider - If you sell in less than 6 months, which you should be able to do with Owner Financing, you will save interest costs. Also if your buyer has bank financing, you will save $9,000 in Note discount. From the information provided, I would say this is a "Go" deal. The better you perform, the more it will enhance your relationship with your investor.

These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.

Real Estate Consultant and Coach. 40 years in Real Estate, and 15 years member of the "Society of Exchange Counselors". Land Developer, Home Builder & Rehabber, Mobile Home Dealer & Rehabber. Owned Apartments, Office Buildings, Strip Center, Ranches, and Land. Also owned many Seller-Financed homes, as well as bought and sold $200 million + of Seller-Financed paper. Visit my website http://RealEstateJack.net/ Article Source: http://EzineArticles.com/?expert=Jack_Rogers

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Article Submitted On: December 01, 2010

How to Successfully Flip a House

By Tom Bradburn

Flipping a house is an extremely involved process but can also become an extremely profitable process. Flipping a house involves three well defined areas in order to find true success. These are the purchase process, remodeling and selling. If a person is not knowledgeable in all three areas, problems could be lurking around the corner.

Step 1

Purchasing the house that you intend to flip can be the most important step in the entire process. While a house can be purchased using any number of methods, such as at an auction, a bank foreclosure, a tax sale or even from a desperate homeowner, the end result should be the same.

Your interest should always be to purchase a property, in an area, which will make a profit. Never fall in love with the house, but always fall in love with the deal. If the price you pay for the property is too high, you will have a problem selling for your asking price later on. If you purchase a property in a questionable neighborhood you may have problems during the selling process later on.

Learn the market in your area of interest. Learn the actual value of homes in your area of interest. Have some idea of the price that you can sell for and then negotiate, negotiate and negotiate. Pay as little in closing costs as possible. Closing costs should be added to the purchase price and are many times a hidden fee.

Before you agree to terms and sign a contract understand the profit possibilities. Keep in mind that any repair estimates, which you have compiled, will normally be lower than expected and your remodel expense will normally exceed your estimates. The question should be, is there enough room between my purchase price and my possible selling price for me to realize a profit? Take into account, before you purchase a property, the large ticket items which you must replace during your remodeling process. Items such as air conditioning units or a new roof. Take time with this question and be honest with yourself.

Step 2

Remodeling your flip house can be a tedious process. The things you should know during this process is how much you will be able to spend. Understand that you may not have enough money to perform every remodeling idea which you dreamed of. Many times, necessity will dictate what you can or cannot do during this process.

However, there are many things which you may be able to control. For instance, many air conditioning companies will replace on old unit with a new unit for a customer. The company may be able to refurbish the old unit and sell it at a reduced price. This could save you thousands.

Many times you can hire a local handyman to replace a roof for a fraction of the price that a roofing company will charge. Do not over indulge during this process. Your goal is to make a profit and you must create ways to save money. Think outside the box while saving money, but at the same time create a great product for your potential buyer.

Step 3

Selling your house for a profit can sometimes be a problem. I do not recommend that you use a realtor. That will cost you 6% of the sale and you may not be able to afford that luxury. I suggest that you sell your house yourself. You must be flexible during the selling process. Many times, holding out for top dollar can not only cost you thousands, but at times it can cost you the sale. Here are a few tips.

Before you list your finished flip house make lists. Make a flyer of your property and list things such as the size and age of the, air conditioning unit and the furnace, the age of the roof, the kitchen appliances and so on. List every advantage which your house has, such as a fenced back yard, two car garage, sprinkler system, reverse osmosis system, security system. Potential buyers love this type of due diligence.

If you have the ability to put a photo of your house, in the flyer, that is a plus. If you do not, find someone who does. Print the address, school system and if the house is close to the fire dept., the police dept., or shopping. Call the newspaper and place a small classified ad for the sale of your house. Keep it simple. Only the words, "Open House", the address and the times at which you will conduct the open house.

Purchase open house signs. These should be large signs, approximately 24 inches by 30 inches. Purchase signs with an arrow on them and write, in very bold letters, the address of your property on each side of them.

The night before your open house, go to popular hotels and ask the management if you can leave a few of your flyers on their counters. Some will say okay and others will not. Another great place to leave your flyers is at restaurants or banks. Any place where you may find a potential buyer is a great place to leave a flyer.

On open house day, check your property one last time and make sure everything is perfect. Cut and edge your grass. Trim the bushes and trees. Once your house is perfect, put your open house signs on street corners. Direct traffic from every busy street possible and also have a sign in your front yard.

If you have done your job correctly, a buyer will be at your house before you know it. Here is one thing to remember. If you list your house with a realtor, your house could be listed for up to six months. You must be aware of that while selling your house yourself. Be patient and persistent. Replenish your flyers each day, keep your attitude positive and never give up

As you can see, flipping a house is an extremely complex process. Many have tried it, but few have found real success doing it. Know the real estate market in your area of interest and do not over pay for a house. You should be looking for a great deal but if you are not knowledgeable, about your area of interest, you will not know what a great deal is.

Tom Bradburn has flipped 34 houses and rented another 18 during the past 5 years. Tom has also written the book, "How to Successfully Flip a House." Get more information at http://www.howtosellmyhousealone.com. Article Source: http://EzineArticles.com/?expert=Tom_Bradburn

My Goal For this Year: 1 Million Pesos Net Profit by 11:59 pm 31 December 2010 by Buying and Selling Houses in Metro Manila

Goal Setting - How to Effectively Program Your Goals By Richard J O'Neill

I'm going to show you an effective goal programming technique that is used by entrepreneurs and successful business people all over the world. To do this technique, you need to be aware of your what your goals are in advance so if you aren't yet clear on them then take some time out to sit down and write out the goals you wish to achieve.

The programming of your goals should take no more than ten minutes each day, so select a time when you won't be disturbed and its also important to choose a time when you are most alert. For me, that time is in the evening between 8pm and 10pm as i'm a night person but for you it may be early in the morning or in the afternoon. Choosing the right time is important because it means you are being compatible with your energy pattern, personal psychology and daily rhythms. Some people prefer to program twice a day, but regardless of that, always program in a relaxed and unhurried state, and if you find that you miss a session every now and then, don't worry about it. If you think you might not have the time to do your programming, then don't try and squeeze it in between appointments and daily activities, just leave it till the day after. Remember, when programming you need time to ease into and ease out of the state.

Do the following programming exercise.

Begin each session by giving yourself 2-3 minutes to relax each and every muscle in your body starting from the top of your head and down to your feet. Imagine wave after wave of magnetic like relaxation flowing through each of your muscle groupings. Once you have done that, take a few moments to take several deep breaths. Hold them for a few seconds and release, allowing yourself to relax just a little bit more with each exhalation. The importance of being relaxed cannot be stressed enough, because in order for your powerful and imaginative right brain to work most effectively, the monkey chatter and thoughts of your left brain must be stilled and quieted. Once you reach the alpha-theta state, your images and words will be much more easily received and accepted to make programming even more powerful and effective.

To begin programming your first goal, always start with the feelings and excitement associated with the attainment of the goal and while maintaining the feeling, gently bring in your right brain image of the goal and allow a few moments for the image to become clearer. Next, while simultaneously holding the image of your completed goal, begin repeating an affirmation that supports the completion of the goal, for example, "I give thanks and am extremely grateful for the promotion i have just received." Allow the feelings, images and affirmations to work together in concert to attract your completed goal to you for 30 seconds, and then stop. Clear you mind and repeat the programming for that same goal once more.
Finally, go on to do the same process for each of your goals twice and the whole process should take no more than 10 minutes.

If you make a commitment to do this exercise everyday for each goal it should take you around two weeks to create the new mental patterns needed to help you towards achieving your goals and dreams and you'll find that the old mental blocks that once hampered you are no longer present. You will be free to go forth and achieve your hearts desires unhindered by doubt and excuses.

Richard O'Neill is a TEFL Teacher and a trainee life coach who hopes to one day open his own spiritual retreat to aid others in their healing process. For some useful info and resources on meditation and how to attract abundance go to http://www.learntomanifestdesires.com Article Source: http://EzineArticles.com/?expert=Richard_J_O'Neill