Archive for the ‘Private Money Mortgages’ Category

Real Estate Investor versus Private Money Mortgage Lender – Part 6

Saturday, June 11th, 2011

This is the sixth and final article in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

As you have learned, there are a few similarities between being a Real Estate Investor and a Private Money Mortgage Lender, and a whole lot of differences. Each one has its own set of Pro’s and Con’s.

Putting it all Together
How do you decide if being a Real Estate Investor or a Private Money Mortgage Lender is right for you?

The first step is to answer the questions that were presented in the first article. Once you know your goals and where you want to get to, you can create a path to reach them and get there.

The second step is to reread articles 2-5 and start thinking about which path will help you reach your goals.

The third step is to speak with Real Estate Investors and Private Money Mortgage Lenders. Visit your local Real Estate Investor Association, and talk with people. Learn from the individuals who are doing business in today’s market.

The final step is to take action – make a decision and move forward. If you decide the course of action you chose is not for you, you can always change gears and paths. It is called the ready, aim, fire, re-aim and fire again method. Kind of a long for a method, but it works.

Make a decision and move forward. You will never have all of the facts; therefore, you need to make the best decision you can with the information you have. As you move forward, you can adjust your actions and decisions according.

I am a Real Estate Investor, and I love being a Real Estate Investor. I have Private Money Mortgage Lenders that lend me money, and they love being Private Money Mortgage Lenders.

Which is right for you?

Only you can answer that question.

If you have any questions, please contact me, and I look forward to speaking with you.

No matter your decision, Good Money Growth to You!

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , , , ,
Posted in Finance, Investor, Private Money Mortgages, Real Estate | No Comments »

Real Estate Investor versus Private Money Mortgage Lender – Part 5

Sunday, June 5th, 2011

This is the fifth of six articles in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

The Cons of Private Money Mortgage Lender is probably the shortest list, but the first three items are the reasons why some people decide to not become a Private Money Mortgage Lender.

Do not Receive the Benefit of Appreciating Property Value – A Private Money Mortgage does not receive a direct benefit from appreciating property value; however, there is huge indirect benefit. As the property appreciates in value, your Private Money Mortgage loan becomes more secure as the Real Estate Investor’s equity in the property increases.

Do not Receive Tax Benefits of Property Ownership – If tax benefits are your priority, then Private Money Mortgage loans might not be for you. You should consult with a CPA and/or a tax attorney.

Do not Control the Property – Control is a relative term. There is a reason Bank of America, Wells Fargo and the other banks are not in the property owning business. True, the Real Estate Investor decides when to sell the home, but if the mortgage is not paid, the Private Money Mortgage Lender takes ownership of the home.

Potential Foreclosure – If the Real Estate Investor does not make the payments to you, you will need to foreclosure on the Real Estate Investor and take ownership of the home. This process can be lengthy; however, there are methods to accelerate the process. Those acceleration steps need to be written into the necessary documents before closing.

If you do have to foreclose on the Real Estate Investor, you receive a property in return (a property that probably has a tenant living in it). What other investment gives you that kind of collateral?

The important thing to know is what are your goals? Are control, appreciate and tax benefits more important than a fixed income? Becoming a Private Money Mortgage Lender is not for everyone.

Is it right for you?

Only you can answer that question. If you have not done so, you need to answer the questions posed in Part 1 before you move onto Part 6, which is the final article in this series.

The next article is Part 6 – Putting it All Together.

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , , , ,
Posted in Investor, Private Money Mortgages, Real Estate | 1 Comment »

Real Estate Investor versus Private Money Mortgage Lender – Part 4

Sunday, May 29th, 2011

This is the forth of six articles in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

Private Money Mortgage Lending is a little known investment option that provides numerous Pros. Some of the Pro’s are shared with the Pro’s of Real Estate Investing, and they include:

Business Tax Deductions – This Pro only applies if you establish a business to make a Private Money Mortgage Loan (which I recommend for many reasons). Consult with a certified CPA or tax attorney about business related tax deductions.

Passive Income – Once your money is placed as a Private Money Mortgage, you will receive mortgage payments as detailed in the promissory note. This is truly passive income. A Private Money Mortgage Lending business does not require active management.

Income Source – Yes, Real Estate Investing and Private Money Mortgage Lending both provide an income source, but there is one very big difference. Private Money Mortgages provide a FIXED return.

Several Pro’s of Private Money Mortgage Lending only apply to Private Money Mortgage Lending, and they include:

Secured Investment – Private Money Mortgages are secured by the real estate the mortgage is placed on. If the Real Estate Investor who received the Private Money Mortgage is not able to pay the mortgage, then the Private Money Mortgage Lender receives ownership of the property (aka an asset).

High Returns – Private Money Mortgages provide higher returns than other secured investments.

No Tenants – A Private Money Mortgage Lender is able to benefit from investing in Real Estate without dealing with tenants. Many Real Estate Investors say dealing with and managing tenants is their biggest challenge.

Customized to Meet Your Investment Needs – Private Money Mortgages can be short or long term. They can be interest only or amortized. Private Money Mortgages are completely customizable.

An Asset Without the Associated Liability – We live in a litigation society. Owning a property with tenants presents many liability issues from properly marketing to tenant selection to property maintenance to tenants living in the property to the tenant’s friends. Private Money Mortgages provide a Real Estate backed asset without the liability of Real Estate Investing.

Private Money Mortgage Lending is a way to benefit from Real Estate without the need to buy, remodel, maintain and rent/sell a property.

Is it right for you?

Only you can answer that question. If you have not done so, you need to answer the questions posed in Part 1 before you move onto Part 5.

The next article is Part 5 – The Con’s of Private Money Mortgage Lending.

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , ,
Posted in Investor, Private Money Mortgages, Real Estate | 2 Comments »

Real Estate Investor versus Private Money Mortgage Lender – Part 3

Friday, May 20th, 2011

This is the third of six articles in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

The following items are some of the most common Con’s of Real Estate Investing for new Real Estate Investors. Once a Real Estate Investor becomes proficient at running a Real Estate Investing business, the following items might no longer be Con’s.

Well, some experienced Real Estate Investors think a few of them will always be Con’s; yet, they are Real Estate Investors, because for them, the Pro’s outweigh the Con’s. That is the key – weigh the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending before you decide on either path.

Run a Business – This is something the infomercials do not tell you. YES, you must run a business. Even if you do not incorporate your business, you will need to be able to run a business. You will create budgets, seek legal and tax advice, negotiate with vendors (contractors), create marketing plans, maintain records and more.

Run a Real Estate Investing Business – Each business type has its own specific requirements and skill sets, and a Real Estate Investing business has many. To name a few, a Real Estate Investor must be able to find a property, analyze a transaction, prepare/create/read contracts, conduct due diligence, inspect a property, determine property value, finance a purchase (cash or financing), remodel a property, market to rent/sell a property and manage a property (and tenants if a rental property).

Tenants – If you own rental properties, you will need to conduct tenant background checks and risk analysis when you evaluate rental applications to fill a vacancy. If you have the unfortunate experience of a nonpaying tenant, you will need to evict the tenant (I love being a Real Estate Investor, and this is the only item in this article I still find a major Con.). Some rental property owners hire a property management company to manage the property, and if you hire a company, you will typically pay a 10% fee, which will reduce or even eliminate your monthly profit.

Liability – One of the main reasons to incorporate your real estate investing as a business is for liability protection. You will also need to purchase the proper insurances to protect you and your business. Another method to protect you and your business is to hire a lawyer to review all contracts and other legal document (including rental agreements and tenant documents).

Vacancy – There will be times your property will be vacant, and a vacant property does not produce income (or less income if a multi-unit property). Vacancy can severely hurt your yearly profit.

Maintenance Costs – All properties require maintenance. As a landlord, you are responsible for the maintenance. Many of the repairs and expenses are unexpected and require immediate attention. If the dishwasher breaks, roof leaks, HVAC breaks and so on, you will be responsible for the repair. Even if you fix the items yourself, you pay for the parts, tools, supplies and equipment, and you give your time. Is there anything more valuable than your time?

You can pay vendors and service providers to complete many of the listed items, but when you pay others, your profit shrinks.

Real Estate Investing as a full time business is, just that, a business. There are many aspects to being a Real Estate Investor, and it can be a very rewarding business.

Is it right for you?

Only you can answer that question. If you have not done so, you need to answer the questions posed in Part 1 before you move onto Part 4.

The next article is Part 4 – The Pro’s of Private Money Mortgage Lending.

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , , , , ,
Posted in Finance, Investor, Private Money Mortgages, Real Estate | 3 Comments »

Real Estate Investor versus Private Money Mortgage Lender – Part 2

Friday, May 13th, 2011

This is the second of six articles in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

There are numerous Pro’s of Real Estate Investing. Some of the Pro’s are shared with the Pro’s of Private Money Mortgage Lending, and they include:

Business Tax Deductions – This Pro only applies if you establish a business to purchase Real Estate (which I recommend for many reasons). Consult with a certified CPA or tax attorney about business related tax deductions.

Income Source – If the property is rented and there is positive cash flow, you will receive a monthly income.

Passive Income – This Pro only applies to if a property management company manages all aspects of the rental property.

Several Pro’s of Real Estate Investing only apply to Real Estate Investing, and they include:

Property Tax Deductions – Tax Deductions related to property ownership are a huge Pro for Real Estate Investing. If your goal is to maximize tax deductions, then becoming a Real Estate Investor and acquiring Rental Properties is probably your best option. I am not a CPA or tax attorney, and I highly recommend you consult a certified CPA or tax attorney about all tax related questions before making a decision based on tax benefits.

Property Appreciation – Over the long run, real estate values have traditional increased; however, we have seen many real estate markets lose value over the last few years. If your goal is to invest for the long term, then Property Appreciation is still an attractive Pro for Real Estate Investing.

Long Term Wealth Generation – This Pro is tied into Property Appreciation and having your Rental Property mortgage paid by your tenants. Long Term Wealth Generation is my favorite Pro of Real Estate Investing.

Maintain Control of the Property – This Pro is typically for investors who prefer to actively control their money and investments.

Property Ownership – This Pro is tied into Property Tax Deductions and Maintain Control of the Property.

When compared with Parts 3, 4 and 5 of this article series, the Pro’s of Real Estate Investing seems to be easily outweighed; however, this might not be the case for you. Take me for example – I am a Real Estate Investor, and I love it. It works for me.

Is it right for you?

Only you can answer that question. If you have not done so, you need to answer the questions posed in Part 1 before you move onto Part 3.

The next article is Part 3 – The Con’s of Real Estate Investing.

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , ,
Posted in Finance, Investor, Private Money Mortgages, Real Estate | 3 Comments »

Real Estate Investor versus Private Money Mortgage Lender

Friday, April 29th, 2011

This is the first of six articles in a series to discuss the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending.

Real Estate can be an excellent method to build wealth, earn an income and plan for retirement. Unknown to most people, there are multiple methods to invest in real estate. The well known method is to be a Real Estate Investor. The less known method is through Private Money Mortgages and to be a Private Money Mortgage Lender.

This series will focus on the Pro’s and Con’s of Real Estate Investing and Private Money Mortgage Lending. If you would like to learn about Private Money Mortgages, please visit www.sandspropertyinvestments.com for details information.

The series consists of
Part 1 – The Introduction
Part 2 – The Pro’s of Real Estate Investing
Part 3 – The Con’s of Real Estate Investing
Part 4 – The Pro’s of Private Money Mortgage Lending
Part 5 – The Con’s of Private Money Mortgage Lending
Part 6 – Putting it All Together

Before we jump into the Pro’s and Con’s of either, you need to ask yourself, and answer, a question.

What is your financial goal?

That seems like a simple question; however, there are multiple facets to it.

Are you looking for growth, income, tax breaks or a combination?

How long do you want to invest (timeframe, time to retirement)?

There are many other factors that go into creating a financial goal and plan. For more information on it, you can contact your financial planner or search online.

Another question to ask yourself is how much time do you have/want to dedicate to your investment?

The decision to be a Real Estate Investor or a Private Money Mortgage Lender can only be made after you determine your financial goals and available time. By starting with the end point (goal), you can develop a path (plan) to reach it.

The next article is Part 2 – The Pro’s of Real Estate Investing.

Aaron

www.aaronsilverman.com/blog
www.aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com

Tags: , , , , ,
Posted in Finance, Investor, Private Money Mortgages, Real Estate | 2 Comments »

The Dow Jones returned 18% in 10 years… uhmm… only 1.8% per year…

Monday, March 28th, 2011

Yes, that is correct – from March 16, 2001 to March 16, 2011, the Dow Jones increased 18%, which equals 1.8% per year.

What??? Only 1.8% per year? Here are the numbers for one share of the Dow Jones:

March 16, 2001 – $9,823
March 16, 2011 – $11,613

That is a $1,790 profit over ten years or $179 per year.

Hmm… that Return on Investment (ROI) does not seem worth the risk…

Is there an investment alternative?

Yes, there is! Private Money Mortgages

What are Private Money Mortgages?

Private Money Mortgages are loans made to a Real Estate Investor and in turn the loans are secured by the actual property the Real Estate Investor purchases or already owns. This gives the Private Money Mortgage Lender collateral, and the loaned money is secured by a property. Learn more about Private Money Mortgages at www.sandspropertyinvestments.com.

The Return on Investment (ROI) of Private Money Mortgages varies depending on the interest rate the Private Money Mortgage Lender and the Real Estate Investor agree on. Let’s use 6% per year for an example.

A Private Money Mortgage loan of $9,823 (the same amount as a share of the Dow Jones on March 16, 2001) is made to a Real Estate Investor at 6% per year for 10 years. The Private Money Mortgage Lender receives a mortgage and promissory note, at least in South Carolina (the documents to secure the money to the property vary by state).

At 6% per year, the Private Money Mortgage Lender would have been paid $589.38 each year or a total of $5,894 in ten years.

Let’s compare:
A share of the Dow Jones return in 10 years – $1,790 (18%) or $179 (1.8%) per year
Private Money Mortgage return in 10 years – $5,894 (60%) or $589 (6%) per year

Wow, that is a difference!!!

Does the Dow Jones and stock market outperform Private Money Mortgages in other ten year time periods? Some yes, and some no.

The big question is “Can you afford the volatility of the stock market?” You cannot predict the stock market, and the volatility may hinder your long term investment goals (or short term, if you plan on retiring in 5-10 years).

Private Money Mortgages provide fixed returns, so your ROI (and investment income/growth) is consistent and predictable. With Private Money Mortgages, you can make plans based on a mortgage payment schedule.

Private Money Mortgages are not for everyone; however, they are great opportunities for the right individuals. If you want to learn more or have questions about Private Money Mortgages, please feel free to contact me or visit our website www.sandspropertyinvestments.com

Aaron

S&S Investments, LLC
aaron@aaronsilverman.com
www.ss-investments.net
www.sandspropertyinvestments.com
www.aaronsilverman.com

Tags: , , , ,
Posted in Finance, Investor, Private Money Mortgages, Real Estate | No Comments »