REI WEALTH MONTHLY Issue 31 - Page 10

PRIVATE LENDING BRUCE E. DINGER investor guidelines. They also limit the number of investment properties that can be purchased by one company. On a new home purchase requiring renovations, private lender funds will be allocated to the purchase price, renovations, carrying costs, cost to resell and a small buffer for unexpected expenses. PROTECT YOUR LENDERS Mortgages offer the banks solid, long-term, fixed Each property acquired should be put through a returns. The PML can put themselves in the rigorous evaluation process in order to assess the position of the bank by directing their investment profitability before the property is ever purchased. capital, including retirement funds to well-secured “lntegrity" should be an essential part of the RR’s real estate mortgages. Mortgages have ultimate business. safety because if default occurs, the bank can should be provided these documents to secure their recover its investment as the first lien holder on the investment capital: Also, for the PML’s protection, the PML property. Promissory Note: This is the PML’s collateral for their investment capital Deed of Trust/Mortgage: This is the document that is recorded with the county clerk and recorder to publicly secure their investment against the real property that the RR is providing as collateral MORTGAGE Hazard Insurance Policy: This is where the private lender would be listed as the “Mortgagee” for their protection in case of fire or natural disaster, etc. The RR would pay for a title search as well as a title policy on the home just as would be done in a typical transaction. For a rental investment with a long-term note, the RR always keep a valid hazard insurance policy on the property to protect against causalities.