Private Lender Objections

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styles3000
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182696
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Private Lender Objections
Updated:
2012-11-09 15:45:10
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Private Lender Objections
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These are the typical Objections you'll get from Private Lenders.
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  1. I am just so busy right now?
    • I definitely
    • understand that fact as we are very busy too. I would suggest you
    • make time because the investment is one of the safest you will ever
    • see and the rates of return are staggering. I will do my best to make
    • the meeting very brief, but I would hate to see you miss out on this
    • opportunity.
  2. The
    real estate market is too risky?
    • I understand your
    • feelings. However, the reason we are doing so well is because we are
    • literally buying properties at 65 cents on the dollar or less. Even
    • if the market dropped another 20% this year we would still have a
    • huge equity cushion based on what we are paying for these properties.


    • When we meet I will
    • show you our buying formulas and I know you will agree that this
    • might just be one of the safest things you can do with your money.
    • The mere fact that we are acquiring properties at such a deep
    • discount and that your money will be backed by real estate makes this
    • one of the safest investments around. You compare that with the stock
    • market where your money is not backed by anything.


    • The best thing to do
    • is to just take 30 minutes and I will be happy to walk you through
    • the whole process. How does that sound?
  3. What is
    a private loan and how does private lending work?
    • That is the #1
    • question we always get. In fact, a private loan is a loan that is
    • made to a real estate investor that is secured by real estate.
    • Private Loan Investors are given a first or second mortgage that
    • secures their legal interest in the property and secures their
    • investment. We are not talking about high Loan-To-Value (LTV) ratios
    • the banks and savings and loan institutions make on homes. We offer
    • very low LTV ratios to our Private Lenders to increase security of
    • the loan. Our standard LTV ratios are under 75% of the value of the
    • property securing the loan and frequently as low as 60% to 68%. This
    • means additional security on the investment.


    • For example, if a
    • property is valued at $100,000, our Private Lender will never have to
    • loan more than $75,000 dollars on the property. That’s a 75%
    • loan-to-value ratio. This is obvious a much safer approach from that
    • taken by conventional lenders. These banks get into trouble because
    • they make loans at an 85%, 90%, or even 100% loan-to-value ratio
    • leaving them no equity for transfer costs, if they are ever forced
    • into a position where they have to take back the collateral property.


    • You, as a lender,
    • will never lend more than 75% LTV. As a lender, it is in your best
    • interest to minimize risk and maximize return and this is why a loan
    • should never be made without a 25% safety net. We don’t violate
    • this rule, because your security is at stake.
  4. What
    are my risks when I am lending money?
    • Actually, there are
    • several options but first and foremost, please be aware that
    • “Integrity” is an essential part of our business and we only make
    • sound investment decisions. One of our companies distinguishing
    • features is that we have never been late on a payment to a private
    • lender.


    • Additionally, our
    • company’s policy is to invest our own funds into every one of our
    • projects because if we aren’t confident in our investment decisions
    • why should you be? Likewise, if we ever lose the support of
    • investors, we can no longer operate our business and our own
    • investments would be at stake.


    • However, to answer
    • the question:


    • Option 1:
    • Restructure the Payment – We could restructure the payment schedule
    • on the note. For example, let’s say we are behind on payments to
    • you. Now our company can and would like to keep the house, but they
    • can’t come up with enough money to bring you current in one lump
    • sum. You could let us continue to make regular payments and make an
    • extra payment on our arrearage in addition, or you could simply add
    • the arrearage to the principal balance and extend the term of the
    • loan. This means you would be collecting interest on interest for the
    • entire remainder of the loan. There are always ways to work it out if
    • both sides are willing.


    • Option 2: We Deed
    • You the Property – We could deed you the house. This is an
    • opportunity for you to get a house at a greatly discounted price.
    • When this happens, you can create tremendous profit by reselling the
    • house because we never buy a house unless we are buying it at a steep
    • discount.


    • Option 3: You
    • Foreclose on the Property – If left with no other choice, you can
    • simply foreclose. Foreclosure isn’t as time consuming and costly of
    • a process as most people think. It’s as simple as sending your note
    • and mortgage to an attorney and saying ‘foreclose’.


    • All you have to do
    • then is sit back and wait. Nine times out of ten, before foreclosure
    • is complete, someone will be calling your attorney’s office with a
    • payoff letter, and your loan will get paid off. When this happens,
    • you will collect all accrued interest, your principal balance, and
    • all attorneys’ fees, court costs, and all other expenses you have
    • incurred in connection with your loan.


    • If you wind up with
    • the house that doesn’t mean you have to keep it. It can be sold
    • immediately at a fair sale price and still produce a profit over and
    • above the already high yield on your loan.


    • Now, we’ve talked
    • extensively about default and maybe we’ve provided more information
    • than is necessary, but we wanted to make sure you have all the facts
    • and we’ve answered any potential questions.
  5. What
    happens if I have to foreclose on the property?
    • The chances of this
    • are miniscule; however it is a great question that must be addressed.
    • First off, the foreclosure process isn’t as time consuming and
    • costly of a process as most people think. It’s as simple as sending
    • your note and mortgage to an attorney and saying ‘foreclose’.


    • All you have to do
    • then is sit back and wait. Nine times out of ten, before foreclosure
    • is complete, someone will be calling your attorney’s office with a
    • payoff letter, and your loan will get paid off. When this happens,
    • you will collect all accrued interest, your principal balance, and
    • all attorneys’ fees, court costs, and all other expenses you have
    • incurred in connection with your loan.


    • If you wind up with
    • the house that doesn’t mean you have to keep it. It can be sold
    • immediately at a fair sale price and still produce a profit over and
    • above the already high yield on your loan.


    • Now, we’ve talked
    • extensively about default and maybe we’ve provided more information
    • than is necessary, but we wanted to make sure you have all the facts
    • and we’ve answered any potential questions.
  6. What
    legal instruments protect my loan? Or what documents do I receive?
    • When you loan money
    • you will always receive the following documents.
    • 1) A copy of the
    • mortgage. The original will be recorded on the land records and this
    • must be paid off before the property is ever sold.
    • 2) An original
    • Promissory Note. This keeps me on the hook financially for the loan
    • if something bad were to ever happen to me.
    • 3) A hazard
    • insurance endorsement naming you as mortgagee. This document protects
    • you in case of a fire, water damage, etc.


    • These documents
    • provide you with the security you need and the return which you
    • desire. You will receive the same documents every time you make a
    • loan on a property. We make sure that all of our investors are
    • protected on every transaction.
  7. Who
    Borrows at High Rates and Why?
    • That is a great
    • question (First Name). Investors like us do, because we have learned
    • in our business that it’s not the cost of money that matters, but
    • quick access to the funds so we can capitalize on opportunities.


    • Our company acquires
    • good deals in properties because we can act with lightning speed and
    • can close with cash. Private loans give us this competitive advantage
    • over other investors who take weeks to go through the bank approval
    • process in order to purchase properties.


    • Additionally, if a
    • real estate investor locates a good deal on a property, many times
    • the bank wants to loan on the purchase price not the value of the
    • house, thus penalizing the investor for finding a great deal. Having
    • access to money is generally a deciding factor in investing in real
    • estate, so paying a higher interest rate is irrelevant when compared
    • with the risk of losing the deal. Does that make sense to you?
  8. What’s
    the minimum investment?
    • Our minimum
    • investment is $50,000 dollars although we would prefer to be in the
    • $100,000 dollar range. I would rather deal with one investor as
    • opposed to 2 or 3 on one deal because it is a lot easier
    • logistically. If you are looking to loan anything less than $50,000
    • then you would most likely be put in a 2nd position note.
  9. Who
    handles all of the details?
    • We do and in fact,
    • that is our job! I try and make your life as easy as possible. It’s
    • our job to get you proper documentation and protect your interest.
    • All of this costs you nothing. I pay all the costs and work directly
    • with the attorney/title company. If you make a $100,000 loan, you
    • send a check for $100,000 to the closing attorney/title company and
    • they will notify you that they received the wire and before releasing
    • any funds you will have a note and mortgage sent back to you on the
    • property you are lending your capital on.
  10. Is this a long-term investment?
    • Generally, your
    • investment is tied to a specific project with a timeline ranging from
    • 3 to 12 months. Most of our projects that we rehab take 5 to 7 months
    • so we usually write the mortgage with a 9 month balloon. We also have
    • longer term holds of one year and longer which is very advantageous
    • to you, however the interest rate is a little lower because we keep
    • you money in play for a much longer period of time. You can pick a
    • term that suits your strategy. I would be more than happy to discuss
    • both options with you.
  11. What if I need to liquidate?
    • If you want out, a 60 day written notice is required, because we will need to replace
    • your funds with another investor’s money. You really shouldn’t
    • make mortgage loans if you feel you will liquidate this shortly, but
    • the option is always available and we have been able to liquidate in
    • as little as two weeks in some scenarios. Also, unlike with a bank
    • CD, there is no penalty for early withdrawal. Just call us, with 60
    • days’ notice and we will handle all of the details.
  12. Is my
    investment really as safe as it sounds?
    • Yes! We always
    • follow these common sense guidelines that we’ve talked about. Your
    • money will grow two, three, or even four times faster than your
    • current investments and you maintain control. Each one of our
    • properties that we acquire is put through a rigorous financial
    • evaluation in order to evaluate the profitability before the property
    • is ever purchased.


    • Remember that making
    • loans is a business and should be treated like a business. If you set
    • up a simple system and let the professionals implement the system,
    • your loan portfolio can be hassle free and produce staggering yields.


    • The best part is
    • that every loan you make is backed by a property unlike any stock
    • market investments you may have made in the past.
  13. How do
    I use my IRA’s or pension plan?
    • Making real estate
    • loans is a widely accepted use for IRA’s and other Retirement
    • Plans. Most people do not know that you can make private mortgage
    • loans using the funds which are already in your IRA’s and other
    • retirement plans. Think of the power of loaning out funds at high
    • interest rates that are Tax free or Tax Deferred!


    • In order for you to
    • use retirement accounts for loans they must first be administered by
    • a third party custodian. One custodian we commonly work with is
    • Equity Trust Company. You can visit them on the web at
    • www.trustetc.com or simply talk to us and we’ll help you with the
    • setup of your account.


    • After selecting your
    • custodian, you simply send a transfer form to them and they’ll do
    • all of the work for you. Once you’ve done that you are ready to
    • make private mortgage loans.


    • From there, you
    • simply notify your custodian about the investment you are looking to
    • make and send the check for the gross amount of the loan. Even
    • better, we can do all the work for you and you just sign few
    • documents, sit back, relax and wait for your money to grow tax free
    • or deferred like grass on a spring morning.
  14. Okay…I
    am going to think about it?
    • I understand
    • _____________. Is there anything you are not clear on more
    • specifically is there anything that is holding you back from going
    • forward?


    • Why don’t we do
    • this…the next project that comes across my desk that I need a
    • private lender for I will call you and take you to the property so we
    • can run through the numbers. I will show you the comps and the
    • financials so that you feel more comfortable. How does that sound?


    Or


    • Why don’t we do
    • this. I just completed a project that we used another private lender
    • on and I would love to take you to the property so we can run through
    • the numbers. How does that sound?
  15. Can I
    do less money now and then increase it in the future?
    • You most definitely
    • can, because it is your money. We do have a minimum investment on all
    • of our projects and if you are looking to loan less than the minimum
    • then you will have to go into 2nd position. It is easier for me to deal with one lender as opposed to 2 or 3 on each project so yourmoney may not be active all the time.
    • What is the most you
    • would be willing to lend right now?

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