10% Return for every mortgage payment

I’m trying to come with a good way’s to borrow private money. What do you think about a 10% return for evey payment someone makes for me for up 9 months? This way the lender doesn’t have to let go all their money at once.

Thanks
auggflo

How would you write that up?
How/When do you pay the invester back?
Secured by Real Estate or just a promisory note?
What is the Max LTV your looking for?

Your willing to pay 120% APR for 9 months, what are your monthy payments? Interest only?

Your question peaks some interest, but I would want to see the structure before I loaned my money. Whats in it for me (the investor)?

When 1st I should say that I’m new at REI and I’m looking for ways to use other peoples money at a low cost. What I have in so far is, I would secure it however the lender wants Real Estate or promisory note. I will pay them when the house is sold or up to 9 months. If the house is not sold in the 9th month I will refinance it and pull their money out. The lender will gain 10% on their money which is more then most savings accounts. I would only do this on a house that I can purchase at 70-75% LTV.

How does it sound so far.

Thanks
auggflo

Your on the right track, just need to fine tune your pitch. Look into Hard Money Lenders and use that as a guideline to base yours on.

You are very close to some HML’s, except your looking to by-pass the points & fees…which are very steep with HML’s.

Structure it with terms they know…ie APR and such. 10% on every month payment you make for me, up to 9mo’s is a little confusing.

Try: 10% APR for XYZ loan amount due in 6-12 months, with interest only payments (or no payment if you can talk them into it). Secured by 1st mortgage position with Max LTV of 70% ARV.

Good Luck and happy investing.

This might sound like a dumb question but I need to know. What benefits do you have as a 1st on a mortgage?

Thanks
auggflo

1st mortgage gets paid first from the auction proceeds (Tax liens and such, trump mortgages though) should it get foreclosed on.

example:

1st mortgage: 100K
2n mortgage: 50K

You stop paying, and I (1st position) foreclose and take it to auction…it is auctioned off at 100K. I get my 100K. BUT…if I was in 2nd position…I’d get squat.

Gotta Love this forum.

Dmiller, Thanks a lot for your help.

Thanks
auggflo

If your the 1st on the mortgage, do you control when the house can be sold?

Thanks
auggflo

You the Owner (holder of the deed) controls when its sold.

I as the mortgage lien holder gets paid when you sell, or I don’t release the lien. No Release no clear title = no title insurance for new buyer.

Just wondering what other pro’s and con’s some of you see doing this.

Thanks
auggflo