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Being the Bank

Being the Bank

Many people are interested in building wealth through real estate investments and don’t know where to start.  Our team has spent the last 10 years researching different techniques on how to raise capital and put deals together.  We discovered the key to success – becoming the bank.

How does one become the bank you ask?  Well it starts with minimizing risk in each investment and allocating across multiple investment types.  We personally love helping others invest in short and mid term asset based loans – or in other words trust deeds that are secured by real estate.

Why is being the bank the best position to be in?   The money most at risk in any real estate purchase is the downpayment and rehab costs, which are typically borne by the borrower.  Taxes and the bank are the first to get paid when properties are sold.  The last person to get paid is the borrower.  While no investment is 100% guaranteed, the risk is severely minimized by leaving in tens of thousands of dollars of protective equity that transfers to the lienholder should a foreclosure be necessary.

How do you avoid the same problems that caused the foreclosure meltdown?   We specifically choose non-owner occupied 1-4 unit properties.   The reason we choose these types of properties is that your average buyer can purchase the property within a reasonable period using conventional financing, making the resale time lower than say, commercial properties or apartment complexes.   We select homes that are in average neighborhoods – no ghettos and no multi-million dollar mansions that reduce the risk of vandalism, buyer financing problems or having a limited pool of buyers.  We mitigate problems by lending to real estate investors who have experience and a proven track record of success.   And we have the potential to profit if the borrower defaults and we have to take the property back.

What are other good reasons to be the bank?  The rehabber/borrower is the individual who is responsible for any liability issues that may occur should something bad happen to the property.  You have a pre-determined rate of return that comes in with little to no effort on your part.   The rehabber may spend hundreds of hours repairing a property, whereas the private lender may spend as little as a couple hours reviewing the investment and wiring money.   In a world where time is one of your most precious resources, we like to show people how to maximize returns, minimize risk and free up their time for family, friends and the lifestyle that they desire.

By |March 31st, 2015|Passive Investing, Tips from Terri|0 Comments

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