trust loans
Using Your 401k/IRA To Invest in Real Estate
Private Money lending is characterized by making a loan to a borrower who executes a promissory note and deed of trust (also known as a trust deed or mortgage) encumbering the borrower’s real property. The promissory note is the borrower’s promise to repay the loan. The trust deed is a security instrument recorded with a county recorder’s office creating a lien on the borrower’s real estate.
A trust deed investment occurs when an investor or mortgage pool purchases either 100% or an undivided portion of the note and trust deed. A trust deed investment is considered to be a fixed income security. JDB Financial raises capital to fund trust deed loans from private sources including, but not limited to, individuals, pension funds, IRAs, and institutional sources. Trust deeds are recorded in first different position. The date and time of recording establishes the lien priority of the trust deed on the title of the property in the public records.
Over the last few years, stocks have cratered. Despite their recent rebound, millions of retired and almost-retired have been forced to extend their working years just to maintain a minimum standard of living. But one asset has skyrocketed in value during that period — real estate. Painful memories of the bear market and continued frustration over low interest rates have a lot of investors looking beyond stocks, bonds and mutual funds for their retirement savings. A small but growing number have discovered they can use the money in their IRAs to in real estate and trust deeds. With a self-directed IRA or real estate IRA you can invest your retirement funds when, where, and how you want. Create your financial future with the freedom to make choices with your retirement plans. Self directed IRAs and real estate IRAs give you the unique ability to choose from a variety of investment options such as trust deed investing /private money lending. By diversifying your investments, you may protect and enhance your retirement. With the rollover option, your benefits are tax-exempt. And you will continue to grow these assets. Your retirement fund grows faster since it is not taxable and you are not required to report your yearly investment income or capital gains. If you want control of your retirement savings, a rollover takes the control from an employer plan and gives you the ability to make the decisions about your money. You decide when to take distributions, and how much to take. You might opt for a tax-free Roth instead of a Traditional IRA, changing the income in your retirement account. How you handle your account is up to you. With sound advice, careful planning, thoughtful management and smart investing your IRA Rollover can be a great asset that works for you. Remember, the transition should be simple and straightforward, but if you experience any difficulties you can seek technical advice from your tax advisor.
How to Earn 6% or More from Your Undervalued Stocks
For investors who have undervalued/poor performing stocks, that are not giving you the returns you desire, lending against stockscould be a great way to turn your portfolio around. Many investors have solid stocks that aren’t currently performing well, due to the economy. In this economy we can’t afford to buy and hold; we need to make sure our money is working for us for both day and night. If you feel strong that these stocks will turn around and you don’t want to sell, borrowing against these stocks could be the solution to your dilemma. You can borrower up to 95% against those undervalued stocks and bonds. Your shares remain in your own name and never transfer into anyone else’s title or control. You can get the cash loan in one lump sum and you can pay off the loan at any time you like, without any penalty whatsoever. You also get the freedom to swap out collateral stocks for stocks of equal value. You have the consideration for more loan cash if your shares rise significantly and most of all you get your shares back immediately upon repayment of the loan. Borrowing against these stocks gives the investor the opportunity to diversify their portfolio; the cash can be used for any legal investment. If you have been considering investing in real estate here’s your chance!
Here’s how to earn 6% or better with those undervalued stocks.
Let’s look at an example. Tom Smith wanted to invest in real estate, but didn’t have the time or knowledge needed to get started. He needed cash to invest; he had stocks and other securities in his portfolio. He was thinking of calling his stock broker to sell some for the cash, but he felt that they were way undervalued, and could only go up. Some of them were priced at even less then what he had paid for them and he understandably loathed the idea of a conventional sale of his securities at their current low prices. His stock position was now worth $600,000; Tom found a private money broker, who showed Tom how he could lend money to real estate investors in need of financing for real estate deals. This was perfect for Tom; he could now invest in real estate without the hassles that come with owning real estate. Although Tom could have invested much less, he decided that he would invest $400,000. At the 12% ROI his broker spoke of, Tom could replace his wife’s income.
Here’s how borrowing against his stocks came to the rescue. Tom received 85% of the closing market value of the stock on a limited recourse basis (@ 5.5%) that provided that if he had to default, he could forfeit his stocks as complete fulfillment of his loan obligation if it came to that and owing nothing more. This meant that lender could go after no other assets no matter how much the collateral was worth, and in default he’d have no negative credit reporting of any kind. However if his favorite stock rose in price – if it appreciated and grew in value during the loan term – that appreciation was his. He could even use some of it to pay off any outstanding interest, even all of the interest and principal, simply by asking lender to liquidate some shares at loan maturity. In short, he had the best of both worlds. Tom could stay “in and out of the market” at the same time, covered on both ends, while locking in today’s stock value before the shares fell any further. Tom borrowed $400,000 against his $600,000 portfolio @5.5%. Through his private money broker, Tom financed a real estate deal at a 12% annum, fixed yield. Tom is now earning 6.5 % on his non performing portfolio. (12% ROI from private money investing – 5.5% interest rate on his stock loan = 6.5% ROI) For Tom, his loan represented keeping all rights to the future appreciation of his stocks and replacing his wife’s income; giving her the option to pursue other interest. A real win-win.
James J. Bullock of JDB Financial LLC. A small team of active real estate investors and mortgage professionals; working together to network with both private money lenders and qualified real estate investors nationwide. We provide private money investors with qualified, fixed yield, low risk, and high return investment projects; secured by real estate; thus adding diversity, investment control and a consistent monthly cash flow to the investor’s portfolio.
How Safe is Your Hard Money or Private Money Investment?
Watch this short video to find out more about how you can invest in private money lending with little or no risk.
How to Deal With Seller Objections
Tip One: Four Ways of Dealing With Seller Objections
There are four ways to handle objections. Here is the list in order of least desirable to most desirable:
Flop! This means not dealing effectively with the objection. (Yes, I know that you are not going to choose this option intentionally.)
Handle the objection. While it’s good to know how to reply to the objection, once the objection is raised it is still somewhere in the back of the seller’s mind.
Melt the objection. This means letting the objection just disappear with time. Many objections are really just the other parties way of saying that they are not comfortable with the situation.
Set the objection aside and then don’t bring it up. Many times if you spend the energy and time to really connect with the other party, then the objection literally melts away.
Preempt the objection. This is the best way to handle an objection–keep it from ever surfacing to begin with.
What You Can Expect From Private Money Investing.
First and most importantly you can expect an annual fixed yield of 10% or higher! Private Investing also offers you portfolio diversification. You have the choice to invest in short or long term investment projects. You will have the opportunity to review the details of every project before you decide to invest. You will receive monthly updates with photos on how your investment is progressing. Unlike your market investments, you have more control over your investment dollars. You don’t have to hand over your money to someone and have blind faith that he/she will invest it wisely. All projects are funded hours before the closing date. The funds will be wired directly to the escrow company/closing attorney, NEVER to the borrower, the broker or his company, thus reducing the chances of fraud. Last but certainly not least, you can expect a low risk investment. There are many steps taken to ensure the private lender is presented with the safest projects possible. To learn more about just how safe private money lending is visit our blog at http://asaferwaytoinvest.com/blog/
What not to expect………..
- No Broker Fees
- No Upfront Fees
- No Hidden Fees
Private Money Investing: How Safe of An Investment is it?
The economy and the banking industry have opened the door for more than just the wealthy to become private money lenders. More and more real estate investors are looking for private money loans and more and more investors are moving off Wall Street and steering toward private money lending. It’s no secret that private money offers an annual fix yield of 10% or more; but just how safe of an investment is private money lending?
As with any investment, there are risks, but working with the right broker can reduce the risk and provide you a consistent flow of monthly income; not to mention portfolio diversification and more investment control. Let’s take a look at the many methods qualified broker should use to add security to PM investments:
First, you should know that most loans are secured by real estate, this alone offers more protection than most Wall Street investments.
The borrower is required to place hazard insurance on the property. The lender (you) will also named on the insurance policy as the mortgagee; as well as the title work. Having the lenders name on the title work, places a lien on the property; ensuring that the property can’t be transferred, sold or refinanced without the lien being satisfied /paid off. On larger loans; Key Man Insurance is often required; as well as, Business Income Insurance. At a formal closing, the lender will be provided with documentation to verify that these security methods have been applied.
Private money loans are normally at a much lower loan to value (LTV) than a bank loan; typically 60 to 70%. Offering the investor an additional layer of protection and wiggle room. The low LTV ensures that if the borrower defaults; the lender should be able to sell the property with 30 to 40% equity, which should make for an easy quick sale to recoup the principle loan amount.
Often the borrower will be required to cross collateralize an additional piece of property to strengthen the loan. Cross collateralization gives the borrower much more motivation to pay off the loan; realizing that default would result in losing the subject property as well as the other additional property collateralized.
You should know that your money will never be sent to your broker or the borrower; when the time comes to fund the deal, the investor will wire the desired funds directly to the Escrow Company/ closing attorney; thus reducing the chances of fraud and gives the investors a stronger sense of investment comfort. The combination of these methods, offers a strong wall of protection for the lender; much more than most investments available today.
Although risk free investments don’t exist, private money lending offers many levels of security and should be a part of every investor’s portfolio.
James J. Bullock of JDB Financial LLC. A small team of active real estate investors and mortgage professionals; working together to network with both private money lenders and qualified real estate investors nationwide. We provide private money investors with qualified, fixed yield, low risk, and high return investment projects; secured by real estate. Thus adding diversity, investment control and a consistent monthly cash flow to the investor’s portfolio.
Just How Safe is Private Money Lending?
Trust Deeds or Private Loans/Hard Money Loans are the secret weapon that the successful investors use to earn high returns while the average person places their money in low yield investments like savings accounts, CDs, money markets, and even mutual funds
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