Private Money Sources
Private Money
Private Money will enable you to purchase real estate without contributing a penny out of your own pocket.
Seller FinancingSeller financing presents the real estate investor with numerous advantages. In fact, it is the absolute best way to get the money you need to purchase the seller's property.
Subject to Real Estate Investing
The short explanation of subject to real estate investing is purchasing the home subject to an existing mortgage.
Private Investors Money Lenders
Private investors money lenders are different from partners, and all of the money you will ever need you can find from investors.
Real Estate Promissory NoteA promissory note is simply an I.O.U. It is an agreement to pay a certain amount of money at a specific time or in payments.
Real Estate Business Partners
Real Estate Business Partners is at the bottom of the list for ways to find private money.
Real Estate Promissory Note
Buying Real Estate with Private Money
You have to give them a Promissory Note. You are going to create some money out of thin air. The United States Government does it all the time.
What is a Real Estate Promissory Note?
A promissory note is simply an I.O.U. It is an agreement to pay a certain amount of money at a specific time or in payments. It’s perfectly legal. Anybody can do it, for anything, at anytime.
How to Get Sellers to Accept
You get sellers to accept by making multiple offers. You make a cash offer, which will be pretty low. Then an all-terms offer which would be a subject to and a note. And then a mixture. You decide what to put in the mixture according to what the people need, which you learned during your interview with them.
Say they need to buy and car and need to move. Well the move is going to cost them $800 and the cost is going to cost them $2000 down and a payment. Therefore, you’re going to give them $3000 and make sure your payment covers what they need.
Creating a Real Estate Promissory Note
It’s easy. You don’t do anything except go to the title company and tell them that you want to create a note. You tell them the terms and they create it. It’s that simple. You can also have your real estate attorney do it, but the title company will usually cost less than the attorney will.
Basic Information for Real Estate Promissory Note
- The parties and their contact information
- The amount, if any, being paid as consideration or equity
- Cashing being paid to the seller
- Collateral pledged as security
- Address and legal description of the property
- Amount of the note
- Terms and when the total payoff is due
- Percent of and type of interest (simple or compound)
- Payment and when they are due (any amount…it doesn’t have to be an amortized amount. Offer to pay them what you can afford to pay them each month)
- When and where the payments are to be paid and to whom
- Balloon payment, if any; a balloon payment being a lump sum at the end
Recordings
What assurance does the seller have that the Real Estate Promissory Note will be paid? Their assurance is two pieces of paper: a note and a mortgage. As part of the closing, the title company will record the promissory note and the mortgage or deed of trust at the courthouse. This means that when the house is going to be sold and the title company contacts the courthouse, they will be told that the house cannot be sold because there’s a lien that has to be satisfied first. That’s the seller’s protection.
Finding money is a skill that will make your real estate investing endeavors successful. Dennis J. Henson's "Private Money" teaches you:
- the skills you need
- the legalities
- the pitfalls to avoid
- the intricacies of promissory notes
- seller subject to
- and dealing with private investors
If you want to succeed at real estate investing, this is a learning tool you cannot afford to pass up.
