For Private Lenders & Investors
become the bank, earn a passive and sustainable stream of income, consiting of principal and interest paymetns, and secured by real esate assets.
-James Timothy White, Founder of RentalInvesting.com
Lending, investing, or selling with owner financing (instead of owning) real estate is one of the best ways to earn passive and secured income streams. Let’s explain the three types of options in working with us to acquire real estate assets:
- Lenders who finance an entire deal through cash of retirement account
- Investors who provide smaller amounts of capital through secured debentures
- Sellers who sell with owner financing
Lenders and investors who provide capital for investing activities and sellers who sell with owner finance receive interest and principal repayments with none of the typical headaches that come with the with direct ownership . When you finance the acquisition of income-producing real estate investments your capital earns income in the form of interest payments while the principal is secured with real estate assets.
Why Become a Private Money Lender?
Private money lending is where a real estate investor asks a private money lender for a loan to buy the real estate. The real estate investor and the private money lender make an agreement, and then the real estate investor receives title to the property and the private money lender receives a secured note, often called a mortgage against the property along with the regular principal and interest payments until the note is paid in full.
Who can be a private money lender?
Anyone can be a private money lender. There are people who provide real estate loans to real estate investors all over the country, and they usually come from three different groups:
- Individuals with idle money or a surplus of cash sitting in a savings account receiving little to no return.
- Individuals who have self-directed IRAs that offer real estate investing as an alternative
- Professional investors, such as hedge funds, banks, and hard money lenders.
private money lenders receive a regular income stream over a set period of time secured by real estate assets, and by participating in a private lending investment strategy allows investors to earn passive income without the responsibility of day-to-day operations such as maintenance, leasing, and collecting lease payments and also mitigates certain risks associated with direct real estate investments.
Some key benefits to being a private money lender:
- Options: Greater control over the investment and loan terms.
- Consistency: Private lenders know the exact amount they are to receive every month, which allows them to plan and know their return on investment.
- Secured: The real estate itself secures the note; if a default occurs, the lender takes the property back and keeps any of the payments and interest already paid.
- Simple: Private lending is usually a simple and straightforward process.
Why Invest in Debentures?
Debentures are a contract between an issuer (the person or company who wants to borrow money) and a holder (the person or company who wants to loan the issuer money). The issuer agrees to pay the holder interest on the outstanding principal at a stated rate until the principal has been paid in full.
Debentures are real estate asset-backed securities where the debenture holder receives interest on the principal payments which are secured by a general security agreement against the companies assets.
It’s important to note that a debenture is different from real estate mortgages because real estate mortgages are secured by real estate, whereas debentures are secured against the general assets of the company which holds real estate assets.
- Unlike private lending or sellers who sell with owner financing, debenture holders can participate with low minimum investment and offer higher returns than other real estate or business opportunities.
- Holders earn sustainable and consistent returns and the principal is paid back on or before the maturity date.
- The real estate assets are usually the primary assets of a real estate company, which means the debentures get priority over shareholders and other unsecured creditors in the event of a default.
- Debentures have a short-term maturity date and can be transferred from one holder to another easily.
- Offer an easy way to diversify capital in an unpredictable market.
Why sell with owner financing?
Owner financing is a different way of selling real estate that offers benefits to both the real estate seller and buyer and when real estate is sold with owner financing, the real estate seller gets to keep their real estate as collateral in exchange for giving the buyer a loan.
In real estate transactions using owner financing, the real estate seller gives the buyer real estate in exchange for a promissory note, and the real estate is used as collateral by the real estate owner if the buyer defaults on the payment.
Visit our for sellers page for more information on selling with owner financing.