Private Mortgage Lending: The Basics to Becoming Your Own Bank
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Private Mortgage Lending Learn the basics. Become the bank Dan Schwartz Real Estate Investor and Coach Baltimore, MD
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Transcript of Private Mortgage Lending: The Basics to Becoming Your Own Bank
Private Mortgage Lending
Learn the basics. Become the bank
Dan SchwartzReal Estate Investor and Coach
Baltimore, MD
Private Mortgage Lending
Learn the basics. Become the bank
All materials available on this training and provided by Equity Merchants, LLC are
samples and for informational purposes only. Equity Merchants, LLC does not
provide legal advice. Although we go to great lengths to make sure our
information is accurate and useful, we recommend you consult a lawyer if you
want professional assurance that our information, and your interpretation of it, is
appropriate to your particular situation. You are solely responsible for ensuring
that your business practices comply with all applicable, local, state & federal laws.
Background
Traditional banking is not what it used to be
Investors play a role in economic recovery
Real Estate is “On Sale”
Huge Opportunity
Why Listen to Me?
Started Equity Merchants in 2010 with Co-Founder Mike Casey
Completed over 100 transactions over next 2.5 years
Close to $1,000,000 borrowed right now for renovations and rental acquisitions
Spent over $20,000 on education and mentorship
Mike and I
www.MasteryCoachingWithDan.com
Next Up
What is a Private Money Loan?
What Is the Process? (deal example)
Benefits of Private Lending
FAQ: What are the “Worst-Case-Scenarios?”
Where Do Funds Come From?
What is a Private Money Loan?
It is a loan made to a real estate investor secured by real estate. Private money lenders are given a first or second mortgage that secures their legal interest in
the property and their investment.
They are becoming more and more commonplace.
How Does Your Bank Make Money?
Equity Merchants Cuts out the Middle Man
Who is it for?
Ordinary people like doctors, lawyers, accountants, retirees…etc.
People getting very low, inconsistent returns in retirement accounts
People that want to invest passively without being a landlord
WHY Does this Work?
Undervalued Real Estate
Marketing for off-market properties
WHY Does this Work?
Investors
WHY Does this Work?
Undervalued Real Estate
Marketing for off-market properties
Strict Due Diligence Process
Ability to act QUICK!
What is the Process?
Documents
Promissory Note
Mortgage (Deed of Trust)
Insurance
Deal Example5312 The Alameda
AfterBefore
Deal Example
BeforeAfter
Deal Example
Before After
Deal Example
Purchased for $42,500 via short sale
Private lender lent $65,000 at 10% accrued annually
After renovation, we put tenant in placeand refinanced the property with a commercial lender
Privately Lender received payoff of $68,864$3,864 passive profit…tax free*
Lets Look at Private Lending vs. Traditional Savings
2% Bank CD 10% Private Money Loan
*Assume 150k Invested
2 Months
5002,500
4 Months
1,000
5,000
6 Months
1,500
7,500
Where Do the Funds Come From?
401K (past employer)
Personal or Business Lines of Credit
Savings/Checking Accounts
Traditional and Roth IRAsSelf-Directed IRAs*
Home Equity Lines of Credit
Liquidated Mutual Funds/Stocks/Bonds
Self-Directed IRAs
An IRA that requires the account owner to make investment decisions on behalf of the retirement
plan.
In order to invest out of one, you need to “roll-over” your IRA funds into a Self-Directed IRA using a 3rd
party custodian (IRS laws)
www.TrustETC.comwww.TheEntrustGroup.com
Self-Directed IRAs
The ideal retirement investment vehicle:Self-Directed ROTH IRA
Allows you to invest and earn money tax-free. You only pay taxes when you take money OUT at
retirement.
www.TrustETC.comwww.TheEntrustGroup.com
Self-Directed IRAs
What Happens If Investor Doesn’t Pay!?
Restructure Payment Schedule
Deed-in-Lieu of Foreclosure
Foreclosure
Lenders will profit after sale of house
Is there a Minimum Investment?
Typically depends on the real estate investor’s program
Deal Specific
What if I need to liquidate?
45-90 day written notice required to replace funds with another investor
Typically no withdrawal penalty
Not Recommended
Who handles the details?
Closing Attorney
Real Estate Investor
How do you get paid?
Monthly Payments
Lump Sum Payment (Principle + Interest)
Quarterly Payments
Can I make long-term loans?
YES!
Benefits
Produces consistent high returns
Rates do not fluctuate
Straightforward terms
Recorded in land records
Secured by equity-rich and marketable real estate
Tax-free wealth building
Benefits
Passive Income (minimal time required)
No dealing with tenants or contractors
Profitable with NO CAP on earnings
More time to improve your golf game
Multiple loans can be made
Booming industry
Private Mortgage Lending
Learn the basics. Become the bank
Office Line: 443-848-8028
Disclaimer
This is not an offer to sell securities. Any person, entity, or organization must first be qualified by the company and read all of the offering documents and attest to reading and
fully understanding such documents. Equity Merchants, LLC and its affiliates are not licensed securities dealers or brokers and as such, do not hold themselves to be. This
presentation should be construed as informational and not as an advertisement soliciting for any particular purpose. All securities herein discussed have not been registered or
approved by any securities regulatory agency in accordance with the securities act of 1933 or any state securities laws.
