"...When my friends GC went to pull permits the claim recorded popped up and now the GC had to show proof that the issue had been fixed. Fast forward a few weeks and $10,000 later, this GC was looking at a significant reduction in their profit, they had assumed all the risk, by having money into the deal, and signing for my friend's loan docs..."
"..Most importantly, they track your monthly payments and act as a 3rd party between you and your borrower. All communication is between the servicing company and your borrower. This allows you to continue to work in your career and not have to worry about collecting payments and tracking for tax purposes,.."
"...You the private lender contact the closing company handling escrow. You ensure that your borrower is actually scheduled to purchase the subject property and what date the transaction is to take place. Normally the seller, which could be a bank, a homeowner or another investor, will choose the closing company. But, you as the new lender have all rights and permissions to still select your own closing company if you should so choose. You would then "Open" escrow..."
I was looking at a recent publishing by Warren Buffet of Berkshire Hathaway (who’s stock is $221,495 PER SHARE!) and I noticed something. We are all saving up for retirement. We all hope to have plenty of money to go around, be able to travel, live how we want to live because of all our hard work throughout the years. Well, let's assume you would need $6000 per month, which would be an annual amount of $72,000, to live a comfortable life. Here's the thing you want PASSIVE INCOME from your investments, meaning your money/ retirement assets throw off monthly cash flow, WITHOUT you having to sell or get rid of your assets. A traditional investment account invests in the stock market. Regardless of the type of stock asset, we are simply talking about the fact that most investment accounts invest your money into the stock market. How are you going to RECEIVE monthly cash flow from your 401K, 403B, your IRA, Mutual Fund, Money Market account ect.?? You have to sell your stock! So now you are having to get rid of the asset. Well, that's no bueno! But there is hope, you see as we begin to reach retirement age we can invest in dividend yielding stock. This means for every share of a certain companies stock that you own you actually get PAID! Wow, that's awesome right! SO here are a few stocks that Warren Buffet, from Berkshire Hathaway suggest for the “cash flow” savvy investor:
#10 Goldman Sachs (GS): For 1 share = $189.11. You will get paid $.60 cents every 3 months. Which means you will have to own 30,000 shares of this stock to receive $18,000 every 3 months, which would put your MINIMUM amount of portfolio value at $5,673,300!!
#1 Proctor and Gamble (PG): For 1 share = $85.21. You will get paid $.6425 cents every 3 months. Which means you will have to own 28,016 shares of this stock to receive $18,000 every 3 months, which would put your MINIMUM amount of portfolio value at $2,387,243!!
I am a huge fan of dividend stock… you don’t have to sell them to get money and you can live off of them. However, if this is the ONLY means of living off of cash flow, it is not truly being diversified.
Let's take a look at another method of investing for cash flow. Now let's assume you still are comfortable with living off of $72,000 per year ($18,000) a quarter. But you lent this money out in well vetted real estate deals that have as many security backstops as possible to watch over and offer as much protection and risk mitigation as possible. What type of interest rate would you need and how much capital? Well $72,000 divided by 8% = $900,000. ….. Wait ….. that's it? "So all I need is $900,000 and lend that out at 8% and I would have $72,000 in passive income?" Yes .... that's exactly what I am saying.
Let's look at another scenario. Let's say you were NOT happy with $72,000 a year and instead you wanted to earn $100,000 a year in PASSIVE INCOME, meaning you don’t break one bead of sweat, this is your money working for you, 24/7, 365 days a year. Well, to get $100,000 in annual passive income, we need $1,250,000 earning 8%, and that's it! This is assuming you ONLY received 8% per year… what if you received more than 8%… let's say 10%? Well if you stuck to your $900,000 that's $90,000 in PASSIVE INCOME (Remember your not working for this money, not one minute!) If you did save up $2.3 Million dollars; invested $1,250,000 at 10% in private mortgages? That's $125,000 annually and here is the real kicker! What if you took the other 1.13 Million dollars that is left over (2.38MM - 1.25MM = 1.13MM respectively) and invested that BACK into dividend paying stock! You can see why I am so passionate about Private Mortgage Investing!
"...We have been given all the tools to pursue and perfect our purpose here in this life. Our goals that we have established for our selves are our cameras subjects. Maybe your goal is to become a better father, mother, or to learn more patience with your spouse. Possibly to become more dedicated to a higher calling. Maybe its to create and grow a thriving successful business. Our camera is all the God given talents and abilities that you have..."
"...You see the most common cause of failure is quitting. Just the same as all great athletes, stars, business professionals, and war hero's they all had one common thread. They refused to quit. To succeed you must have "stickability". You must keep showing up. Just as Michael Phelps shows up 6x a week, 5-6 hours a day, we too, should exemplify "stickability". There will be tough times. We will fail, but this does not mean we are failures..."
"...The next role we want to be sure we have lined up on our team would be our closing company/ title company. Now depending on the state this could very well be the same company your real estate attorney owns and operates. "What is a closing/ title company?", you may ask. Again the company is not as important as what the function of closing is....their function falls inline with these roles.
- They ensure all documents are executed and notarized
- They make sure you receive copies of these documents, both digital and actual
- They ensure that all documents that need to be recorded are recorded and then they will mail to you the actually recorded documents when they receive them back form the county recorders office
- They ensure clear communication between the seller, the buyer and yourself"
"... One of the first steps you will need to do is contact a real estate attorney. By speaking with a real estate attorney, you will be able to find out key issues pertaining to your state in private lending. This includes but is not limited to laws on usury, whether your state is a broker/ non-broker state, drafting up loan documents that protect you and keep you on the side of the law, foreclosure laws as it pertains to lenders in your state, bankruptcy laws, the process of originating a loan, the process of closing a loan, the roles of professionals in regards to a closing a loan, and on and on...."