How Investors/Lenders Work
Banks and Institutions lend money on houses, why not you?
What better security on a note than a Mortgage secured by local real estate with a large equity position, and you receive the monthly payments?
The Process of Hard Money Investing
Hard Money Mortgage Investments are short-term mortgages funded by private individuals on local real estate, paying higher-than-market rates, typically 12% to 17% annually. Each investment is a separate loan and will involve one investor (unless the investor decides to form a group of their own).
You choose the amount of the investment, the area you feel comfortable with and the property type you prefer. In exchange, you receive the original SECURED note and closed loan copy package. You receive interest payments for terms from 6 months to a maximum 5 years with balloon payment at the end of the term, but may be paid off at any time the borrower chooses up to the limit. When the loan is paid off, your initial investment is returned along with any interest and prepayment penalties due.
A mortgage, is a security instrument for real estate loans recorded at the County Recorder's Office. The details of the loan are spelled out in a separate promissory note. The mortgage serves legal notice to the world that the subject property is pledged to secure a loan. It also provides for a rapid method of foreclosure should a borrower default on the note.
Advantages of Mortgages
A mortgage note offers the following advantages as investments:
- Pays out interest monthly.
- Interest rates paid are generally higher than bank rates.
- Notes are liquid and can be sold or traded.
- Investors can borrow against the note, using it as security.
- Security of the mortgage generally increases with time as the property appreciates, providing an even lower LTV.