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 What exactly are private mortgages?
Why would I choose to invest in them?
A private mortgage is a secured debt
obligation, which produces a regular,
predictable income stream to the
investor with all the security,
protections and recourse that a mortgage
lien can provide.
While mortgages do not
typically provide any capital
appreciation, they do generate a steady
stream of interest payments. Unlike
stocks, the security is tangible bricks
and mortar, where legal protections such
as title insurance and many other unique
rights and remedies ensure the
enforceability of a mortgage lien.
What kind of returns do private
mortgages produce? Is the interest rate
fixed?
The typical interest rate for a
direct private mortgage is
8%
to 13%,
depending upon the time frame, the
purpose, the loan-to-value ratio, the
exit strategy and other factors.
The interest rate can be either fixed or
floating, depending upon the way the
transaction has been structured.
Typically the floating rate mortgages
always set the initial interest rate as
the “floor” so that it can go up.
If the Prime rate rises, your mortgage
investment rate increases, but
if the Prime rate drops your initial
mortgage investment rate never
decreases.
Do private mortgage investments
belong in my portfolio?
Not many investments can dependably
generate such strong returns, and few
other investments have an asset like
real estate as a “backstop” providing a
very well protected downside. Whether
private mortgage investments are right
for you will depend upon your time
frame, your risk/reward expectations and
your anticipated need for liquidity.
Furthermore, private mortgages have
stable returns and fit well within a
portfolio of stocks, bonds and real
estate. Adding these to a portfolio will
make the returns of the total portfolio
more consistent. When evaluating any
potential investment, the advice of a
professional investment advisor is
helpful in assessing the role of private
mortgages in an otherwise liquid
investment portfolio.
Can I invest with my IRA?
Yes. There are many IRA custodians
across the US that handle self-directed
IRA’s and are familiar with this type of
investment. You can utilize all forms of
retirement plans including Keogh’s,
Profit Sharing Plans, etc. We accept IRA
and other tax-protected investments
through third-party custodians.
Some
of the IRA custodians we have worked
with are; the
Entrust Group
and the
Equity Trust
Company.
Tax-deferred investors (IRA’s, Pension
Plans, Keogh’s and the like) should
speak with their financial advisor about
any possible impact of UBTI (Unrelated
Business Taxable Income).
 Private
Mortgage (PM) Program
Investment: $50,000
to $5,000,000
As previously stated, our process that
we employ is called Private Mortgage
loans. It is one of the oldest
techniques used to build wealth in
America. In fact, there have been many
companies that have been built on
issuing Private Mortgage loans because
these loans traditionally are higher
yielding while offering security and
peace of mind for the lender.
The simplest way to understand Private
Mortgage loans is to think about how a
bank makes their mortgage loans (while
this example is basic in nature it does
explain their method).
They borrow money from people by
offering them a certificate of deposit
and paying them 5% and then lend the
money out to people wanting a loan at
the rate of 12%. The difference of 7% is
called the spread, and is the basic
building block of how a bank makes their
profit. As you can see, the bank is
therefore the “middleman” in making
loans.
Using the above example, our process
simply cuts out the “middleman” and
allows you to earn the higher rate of
return enjoyed by the bank. Our Private
Mortgage loans have no additional costs
and have no commission charge.
Furthermore, we have flexible payment
options to meet your needs and our loans
usually last only from 12 months to
360
months at which time you will receive
the return of your principle amount and
you can decide if you wish to
participate again with another Private
Mortgage loan. And one more thing, in
this program we NEVER co-mingle or pool
funds together... one investor, one
Private Mortgage.
All of our transactions are handled by
attorneys at some of the best title
companies in the city. All documents are
drawn up to meet state laws and county
regulations. You will always be issued a
Mortgage and Note on the property for
the full amount that we borrowed which
means you have the best collateral for
your Private Mortgage loan.
Once you recognize that you want to be
part of the program, simply contact us
so that we can answer all of your
questions and tell us the range of the
Private Mortgage loan you are interested
in and we will prepare the necessary
forms.
When we receive your completed forms and
funds, we will prepare the proper
documents to be properly filed with the
county recorder’s office and then, after
filing, be returned to you for your
safekeeping. It is truly that simple.
When your Private Mortgage matures, we
send your principal amount (and any
accrued interest) to you in exchange for
a Satisfaction of Mortgage document
which we file with the county to show
the entire process has been completed.
It’s a fact. Investment advisors
recommend a mix of investments to
increase overall investment returns,
while lowering risk. Stocks and mutual
funds can offer a high return, but also
have high risk. Conversely, fixed
investments like bonds and CD's have
lower returns but much lower risk.
However, an alternative is Private
Mortgage loans, which have higher
returns than many other fixed rate
investments, and historically less risk
than stocks. These investments are an
excellent way to further diversify your
portfolio to increase your overall
return and further reduce risk. But be
advised: Private Mortgage loans are not
insured by any government agency like
CD's or bank accounts.
 Safety and Profitability
Its important to note that while there
is a rising number of defaults
nationally in the mortgage market,
Once we have designated a property to be
part of our portfolio, it must pass our
internal tests. We will then review
market value information and, if
applicable, our own appraisal/inspector
to the property. Based on the
information provided to us by our
appraiser and inspector along with our
careful evaluation, we are able to
determine the maximum allowed loan
amount.
The maximum allowed loan amount
will never exceed 60%
of the property’s
quick sale
value, and
must be located on the west coast of
Florida. Once the required loan
amount has been determined, we will then
match a potential investor with the
current investment opportunity and allow
them to review the facts of the loan
request before they decide to commit to
the loan opportunity.
Likewise, we may also have several
opportunities with properties that are
already in our portfolio.
Once you have decided to participate, we
then coordinate the closing date, the
transfer of funds and interest payment
schedule. We do all the research, take
care of the details, and you simply
collect your interest checks on your
investment!
Our first priority is to protect our
Private Lender's (you) investment, as
such; these instruments below protect
your investment:
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