What is Private Money Lending?
Like other Peer-to-Peer (also known as P2P) platforms, Private Money Lending operates in a similar fashion. At its core, it is simply one peer or individual lending to another without the red tape of big Wall Street government backed banks. This allows you to make the rules and keep the secure returns.
Why become a Private Money Lender?
For us it was rather simple; Private Money Lending checked off all of our Investing Smart requirements. Although it can be slow and tedious, it is extremely safe and low risk as our money is always secured by tangible local real estate in a recorded 1st lien position. Our returns are distributed monthly, we can take a quick drive to check on our investment at any time and at the end of the loan term, we get 100% of our money back! It’s amazing!
The Opportunity
Government & Conventional Banking Regulations do not allow traditional mortgage financing for distressed property acquisition & Renovation when intended for Real Estate Investment purposes, e.g House Flippers. Because of this there has been a void created in available financing for Real Estate Investors which has allowed Private Lenders the opportunity to step in and fulfill as in 2017 alone there were:
- $56 Billion Fix & Flip Transactions Nationwide
- $16.1 Billion of those were financed
- Up from $12.7 Billion in 2016
Our Background
Our Marketing
Our Strategy
It’s simple, to lend money to qualified local Real Estate Investors who will pay us back, & then do it again & again…
How Am I Protected?
Take a look and see how your protections compare to traditional Big Bank Lending.
- Traditional Big Bank Lending
- Private Money Lending
- Recorded 1st Lien Loan secured by Local Real Estate
- Yes
- Yes
- All Legal Binding Documents are Prepared by Real Estate Attorneys
- Yes
- Yes
- 3rd Party Verifies Value of Property
- Yes
- Yes
- Lenders Title Insurance is Obtained (paid by Borrower)
- Yes
- Yes
- All Properties are properly Insured with Flood Insurance
- No
- Yes
- Property Surveys are Verified for accuracy prior to Loan Approval
- Yes
- Yes
- Borrowers Credit Report is Requested, Reviewed & Approved based on Lending Guidelines
- Yes
- Yes
- Borrowers Income is Requested, Reviewed & Approved based on Lending Guidelines
- Yes
- Yes
- Borrowers Assets are Requested, Reviewed & Approved based on Lending Guidelines
- Yes
- Yes
- All closings occur at a Title Company
- No
- Yes
- Loan Terms
- 10 – 30 Years
- 6 – 12 Months
- Interest Rates charged to Borrower(s)
- 4% - 6%
- 8% – 12%+
- Loan To Value
- < 97%
- < 70%
- Annual Returns to Investor
- You can buy stock in their company
- 8% - 12%+
- Required to follow Government Lending Guidelines
- Yes, it’s big brother lending
- No, it's your money, your rules
- Typical Timeline for Closing
- 30 – 45+ days
- 5 – 10 days
We 1st Underwrite & Approve the Borrower based on their:
- Credit Score
- Income Amounts & Type
- Asset Amounts & Type
- Exit Strategy
- Experience Level
2nd we Underwrite & Approve the Property based on its:
- Location & Address
- Purchase Price
- Current As-Is Value
- Renovation Budget
- After Repair Value
We then verify all information via independent 3rd party verifications
- Guarantor – Credit, Income & Assets
- Onsite Property Evaluation
- Title Insurance
- Hazard (& Flood*) insurance
- Survey
4th Step is Funding -- this is where the magic happens.
- Details are Triple Checked
- Final Closing Documents are prepared & sent to Title
- The Title Company Verifies Their Accuracy & prepares HUD
- We Approve the HUD/Closing Statement
- Wire Is Sent & Released, we are funded!/li>
Post Funding & Loan Servicing, this is what happens after the magic.
- Final Closing Documents Are Recorded At The County Courthouse
- We Retain All Original Documents
- Payments From Borrower Are Due on the 1st & Are Late on the 10th (no excuses)
- Rehab Funds Are Held in an Escrow Account
- Property Inspection is Completed Before the Release of Renovation Funds
Your Investment Determining Factors
The Guarantor
(the borrower)
- Their Credit Score
- Amount of their Liquid Assets
- What is their Exit Strategy?
- Amount & Type of their Income
- Their Experience Level
- Contractor’s are Vetted
The Collateral
(the property)
- Address & Location
- Purchase Price
- Current As-Is Value
- Rehab Budget
- After Repair Value
- Loan To Value %
The Investment
(your money)
- Amount Invested
- Loan Term
- The Monthly ROI
- The Total ROI
- Closing Date
- 1st Lien Loans Only
Why Other Investors Have Invested with us:
- We offer Guaranteed & Non-Guaranteed returns
- We sign a Personal Guarantee with Recourse
- Our Investments pay between 8% - 12+% Annually
- Our investments range from 6 – 24 months
- You can recall your funds at anytime without penalty
- We’re Unbiased in our Evaluation – it’s not our deal
- We complete Independent 3rd Party Property Evaluations to Determine both the current As-Is Value & After Repair Value
- We’re not overleveraged and in Debt with current inventory
- We have continuous deal flow which allows us to be selective as to who we lend to
- We’re licensed Mortgage Loan Officers of 15+ years and have originated over $150,000,000 in Residential Mortgage loans
- We Vet all Contractors prior to Release of Rehab funds and funding
- We Vet the Listing Agent on all Fix & Flips
- We Pre-Underwrite the Long Term Loan before funding the short Term on all Buy & Holds
- All parties are property insured, including Flood Insurance
- They are able to visit the Property before & after Funding as they have access to their investment throughout the duration of the loan
- They are able to Review & Inspect the property prior to releasing any renovation funds
Avoid these common Private Lender mistakes:
- Not Qualifying the Borrower
- Not Vetting the Contractor
- Inaccurate After Repair Value Estimates & Appraisals
- Subjective vs Objective
- Not Establishing An Underwriting/Approval Matrix To Guide Decisions
- Limited Deal Flow Leads To Higher Risk Tolerance
- Unfamiliar To Foreclosure Process
- Perception is Reality
Contact Us
If you have questions, we likely have answers. Drop us a line and we’ll get back to you in a blink!
1111 Heights Blvd Ste 4
Houston, TX 77008
713-CALL-INK
info@inklending.com