Expert Access:
Private Mortgage Note Investing

Why Private Mortgage Notes

Why

Private Mortgage Notes?

 

Notice to all using this web site and any pages herein:

Direct private mortgage note lendingMortgage pools are like the mutual funds of private mortgages. Each investor's money is pooled with the other investors participating in the pool and the money is used for private lending.

Over the years there have been some notable benefits to investing in a mortgage pool. Because a mortgage pool is pooling the money of all investors, the pool manager is able to reduce risk by diversifying over many different properties.

Of course, the trade-off to mortgage pool investing is reduced returns. The mortgage pool manager draws their pay directly from pool profits. This substantially lowers profits and cuts deep into investor's pockets. However, many investors have leaned toward the mortgage pool option over the direct lending option because it was easier and incurred less risk.

The EquityBuild Finance strategy of investment overcomes the former downside of direct private mortgage lending, giving direct private mortgages the advantages of mortgage pools without the historical challenges typically associated with direct private mortgages. Direct lending is typically reserved for seasoned real estate professionals due to the level of expertise that is needed to identify undervalued properties and go through the appropriate steps to protect the investment and assure a top return on investment. In return, however, they are able to gain direct access to the collateral provided in the direct lending model.

The direct lender typically has an appraisal done on the property, analyzes the value of the property and the upgrades it will need, works the numbers to determine a break-even point, and then calculates what kind of offer on the property will be feasible to earn a good return on investment. Once that's done they find a qualified buyer to purchase the property and draw up paperwork that protects them against the possibility of the buyer defaulting on the mortgage.

It's actually, in our opinion, very satisfying work. However, it does take a great deal of expertise. EquityBuild Finance has made direct private mortgage lending a real possibility, even for the average investor. You don't need any expertise in the real estate market to take advantage of the combination of, good returns and stability, that private mortgages offer. EquityBuild Finance does all the ground work for you. All you need to do to take part in direct private lending is invest the money.

As a direct investor, you'll be able to take advantage of higher returns than you would get if you invested in a mortgage pool without any of the expert knowledge required.

Advantages of Private Mortgage Investing

EquityBuild Finance invests in private mortgages for one reason...
The advantages of private mortgages far outweigh paper investments

There are numerous reasons private mortgages are superior to other investment vehicles and here are some of the primary benefits of hard money lending...
  • Safety
    Your money is secured by a 1st position mortgage lien, which is further protected by title insurance and a hazard insurance policy. House burns down - you get paid! Title problem - you get paid! Also, the amount borrowed will never be more than 65% of the quick-sale value of the property. This leaves a lot of equity in the property as a safety cushion in the event of default.
  • An Investment You Can Touch
    This is an attractive feature for investors. Stocks and bonds tumble all over the place and are controlled by some faceless “expert”. You can never really touch your investment. There is an inherent sense of stability people relate to tangible assets such as land and buildings. Values fluctuate, but not as wildly as stocks and bonds and real estate virtually never goes to zero; thus, there is less risk of losing your principal investment.
  • Professional
    The principals of EquityBuild Finance are seasoned real estate professionals and only use other seasoned real estate professionals as third party vendors when conducting transactions. This adds another layer of safety and security for the investor.
  • Completely Hands-Off
    This can be a completely passive investment leaving more quality time for you and your enjoyment. You’ll leave the particulars of underwriting, closing and servicing of the loan to the real estate professionals. With this type of investment, you won’t have to worry about midnight calls from tenants or lie awake wondering if your stock portfolio will crash the next day.
  • Compounding
     Many “standard” investments such as high-yield CD’s compound one time per year. Our hard money model allows us to compound investor money sometimes up to 3 times per year, thus dramatically increasing investor ROI.
  • Flexibility
     You can choose when to invest and how much to invest.
  • It’s Fulfilling
     People like the idea of being a bank which, in essence, is what you’re doing. Why not make a fortune in real estate lending, like banks do, if you have the resources available to do it?
  • Diversification
     Branching out into other asset classes enhances investor security.
  • Easy to Understand
     You don’t need a PhD in puts, calls, options, candlestick charts, etc. to understand this investment model.
  • Predictability
     Your returns are not dependent on the whims or daily mood of the stock market. They are determined at the time the loan is written, so you don’t need to monitor charts or the daily news to know what your returns are going to be.
  • Proven, Sound Investing
    This type of investing has been around longer than the stock market, longer than the United States – even longer than paper currency!

 

Typical Rates Of Return For Private Mortgage Notes

Every mortgage is unique...

The situation, property condition, and property location factor into the structure of the mortgage and affect the rate of return. EquityBuild Finance must, unfortunately, turn down many deals because they will never produce strong enough returns for EquityBuild Finance investors.

However, those that do qualify for EquityBuild Finance's turnkey system provide an excellent return for an investor.

Some of the other factors that play into the return an investor can get from a private mortgage are...
  • The term of the note.
  • The quality of the borrower's credit.
  • Loan-to-Value ratio.
  • The purpose of the loan.
  • Exit strategy of the borrower.
  • Direct lending or lending through a mortgage pool.
After years of experience, the EquityBuild Finance team has learned to identify ways to improve the rate of return...
  • By adjusting to terms of the note
  • Collecting prepaid interest
  • Having the investor's money repaid prior to the consumption of that prepaid interest
  • And a plethora of other strategies that escape the notice of many private mortgage companies.

 

The above factors make some deals better than others, but private mortgages offer considerably higher returns than traditional mortgages, and they outperform the stock market over the long term.

Our private lender clients contract with borrowers at 12% APR which can sometimes be higher depending on the timeline to loan payoff and other circumstances.
 
Risks Of Private Mortgage Lending

Read More

Risks Of Private Mortgage Lending

Late Payments

We collect late fees that both act as a deterrent and a source of income should the payments be late.

Extended Term (Late Payoff)

Yes, your money would still be tied into the note in this case, but you would still be earning the contracted 12% APR.

Default

Should this happen there are two remedies you have available to you.

  • One, since there is an Assignment of Rents written into every mortgage, you can immediately begin collecting the rent. 99% of the time the rent is higher than the note payment and so you will likely improve your rate of return through the default.
  • Two, you could sell the property. Of course, you will need to foreclose on the property, but because the borrowers are all investors and not owner occupants, they rarely fight to hold on to the property; they would rather cut their losses and walk away. The foreclosure process is typically easy with investor borrowers. Once you own the property you could sell it if you no longer want to be a landlord or just desire profit rather than cash flow. Because the equity positions are at minimum 35%, you will likely be able to sell the property for a large profit and make more than you would have had the investor been current on their note.
  • Three, because of thorough due diligence, to date, none of the private mortgage notes arranged by EquityBuild Finance have ended in default and no property has had to be foreclosed on.

Introduction to Private Note Investing

Read More - Introduction to Private Note Investing

Totally Transparent Double-Digit Returns Policy = Base Returns of 12-15%

When You Add in the Up Front Advantage Incentive of 1/2-3.5 Bonus You Can Earn Up to 19%!

Per Deal Returns: Per deal returns are defined as the amount of money you earn by investing in a single note on a particular property. The more you commit to a single property the more you can make.

We also recognize and respect the commitment many of our clients make to a specific property. To reflect this reality and active wisdom, the policy going forward on a per deal basis for lending with the EquityBuild family of companies is 12% for investments of $50,000-$100,000. Lending investments on a single property up to $200,000 are 13% or you can earn more at 14% with lending investments up to $350,000 on a single property. To reward lending investors who see the full potential of a particular deal, EquityBuild Finance will reward such proactive positions with 15% returns on investments of $360,000+. Consistent with policy, the minimum investment is $50,000. To discuss your double-digit upside in detail for Per Deal Returns please call  877-978-1916.

Policy Benefits Apply to Existing and New Clients, Here's How: If you are an existing client and have $200,000 in total holdings invested as a lender with EquityBuild Finance, by adding $75,000 you will earn 13% paid monthly going forward on all the notes you have with EquityBuild Finance (unless you were one of the few who took action on rare deals that paid more than 13% in the past.) Please note increased interest is not retroactive. If you are a client that is invested in a legacy product at a higher rate that is no longer offered, the new rate will not apply to those funds although those funds will apply towards the Total Holdings to raise the rate of only the new funds to the respective tier.

Alternatively, if you are a new client with EquityBuild Finance and invest $300,000 on a note for a single property, you will earn 14% going forward on that particular deal or 12% to 13% on lending for multiple properties based on total holdings. In all cases, double-digit returns are paid monthly.

Total Holdings: Total Holdings are defined as the total amount of money invested with EquityBuild Finance on lending projects. Specifically, for total holdings invested with EquityBuild Finance under $250,000 there is a 12% return. Funds invested up to $500,000 earn 13% while funds invested up to $1M earn 14%. For loyal investors that lend EquityBuild Finance over $1M, returns are 15% on total holdings.

Minimum investments are $50,000 for new clients and $25,000 for existing clients. Note that when the next rate level is achieved the new rate is applied to all Total Holdings from that point in time moving forward. To discuss your double-digit upside for Total Holdings in detail please call 877-978-1916 today.

Bottom Line: Now more than ever before, procrastination doesn't pay anymore at EquityBuild. This policy rewards early investing and loyalty instantly and enables lenders to see how they can make the most out of their participation with EquityBuild Finance both in terms of total holdings and on a per deal basis, especially in the first week of a new note. As many of you have seen, slots on EquityBuild deals fill up quickly, so by acting early you can be confident this is the most effective way to earn totally passive double-digit returns that are paid monthly.

BONUS PROGRAM: The EquityBuild Finance Up Front Advantage Incentive Program

OVERVIEW

Up Front Advantage Incentive Program rewards EquityBuild Finance clients in two very simple yet powerful ways.

  • of the total note when you invest 25%, 50% or 100% you are immediately rewarded with 1/2-3.5 points depending on the size of the note.
  • Secondly, when you invest in a note in the first week it is available you gain another 1/2 point.

When you combine the advantages of this program with our double-digit returns policy documented below, you can earn 12%-19% on private mortgage notes that are 100% backed by real estate

FULL PROGRAM - UP FRONT ADVANTAGE INCENTIVE PROGRAM

In addition to our Totally Transparent Double-Digit Returns Policy for investors, EquityBuild Finance rewards clients with higher returns the more you invest on larger deals. Also, we help clients act early by paying a bonus half point in the first week the note is available. This policy and incentive program only applies to investments going forward for lending purposes only.

Up Front Advantage Incentive Program = Extra 1/2 - 4 Points Bringing Returns to 12%-19% for 1st Year

EquityBuild Finance wants to give decisive and committed investors tremendous value. This is solid proof that procrastination does not pay. Specifically, in the first week when a new EquityBuild Finance private note is issued there is an automatic half point bonus for all investments where the minimum investment is $50,000. Additionally, the more you invest in a specific note the more points you earn on top of the first week half point. For example, if you invest in 25% (which is $187,500) of a $750,000 note you will earn an additional half point. For 50% on the same note you would earn another 1 points and at 100% of the note you would earn an additional 2.5 points. Keep in mind that if you acted in the first week the 2.5 points is on top of the half point you earned for acting early. Which means you would earn a 3 point bonus making the returns on this note 18%, paid monthly, for the first year thanks to the Totally Transparent Double-Digit Returns Policy detailed in the section below.

For notes of $750,000-$1,500,000 the Up Front Incentive Program gets even better with a 1 point bonus for clients that invest in 25% of the note. At 50% there is a 2 point bonus and at 100% of the note there is a 3 point bonus. Also, by acting in the first week, returns are half a point higher at all percentile investment levels.

For notes above $1,500,000 there is an across the board 1 point bonus at each of the percentile levels where 25% investments in these larger notes are rewarded with 1.5 bonus points. 50% merits 2.5 bonus points and 100% delivers 3.5 bonus points. Think about that, by investing in a full private note in the first week it is available you instantly earn 4 extra points. This delivers 19% returns, paid monthly, in the first year when coupled with EquityBuild's industry leading Totally Transparent Double Digit Returns Policy which is detailed below.

Please note: Proof of wire transfer must be in by the end of the seventh day of the private note being available and all necessary steps must be taken for an IRA custodian to send wire at that time.

To discuss your double-digit upside in detail please call 877-978-1916.