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Private Money Investors

Private Money Mortgage Questions and Answers

What kind of loans are Private Money Mortgages?
Why does S&S Investments, LLC seek Private Money Mortgages?
What type of properties does S&S Investments, LLC purchase?
How do I get paid?
Do I need a lot of money?
Who handles the details?
What documents secure my investment?
Is this a mortgage pool?
Is it a first or second mortgage?
Is this a long-term investment?
What if I want to liquidate?
Where can I find money to invest?
Summary


What kind of loans are Private Money Mortgages?
A Private Money Mortgage is a loan you make to a Real Estate Investor and in turn your money is secured by the actual property the Real Estate Investor purchases or already owns. This gives you collateral on your investment. We work with two types of loans.

Private Money Mortgage Type 1 – Rehab Loan (Short Term)
Some properties we purchase require repairs (some require extensive repairs). These properties allow us to negotiate a better deal for us and our Private Money Mortgage Lenders. Your Rehab Loan will not exceed 75% Loan-To-Value (LTV). Our purchase price of the property will not exceed 75% LTV minus repair costs. That means the purchase price of the property plus the repair costs will not exceed 75% LTV.

Private Money Mortgage Type 2 – Long Term
Our main focus is to purchase properties and hold onto them for the long term. We typically focus on multiple unit properties to hold for the long term; however, we also hold some single family homes for the long term.

Do not worry, you will never deal with a tenant; we will. Remember, you are the bank, and banks do not deal with tenants.

You should never make a loan to a Real Estate Investor without a safety net of equity for Rehab Loans and equity and cash flow for Long Term Loans. We do not violate our rules, so you come out profitable.
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Why Does S&S Investments, LLC seek Private Money Mortgages?
Have you tried to obtain a loan from the bank? I have! The process can be very slow, and in recent years has become slower. Having private capital available enables us to act quickly which is crucial when purchasing properties. Also, there are many banks that want to loan on the purchase price not the value of the house, thus penalizing us for being able to purchase at below market prices. Finally, Private Money Mortgages enable us to purchase properties in greater volume giving you a greater opportunity to make money.
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What type of properties does S&S Investments, LLC purchase?
We purchase single family homes and multi-family buildings; our focus for multi-family buildings is 4-12 units. Regardless of the type of building, we look at two factors when we purchase a property: equity and cash flow.

In the past, we primarily focused on properties in the Charleston, SC area. Now we only focus on properties in the Lowcountry (Charleston, Berkeley and Dorchester counties, SC). We made the change, because we understand this market better than other markets, which improves our ability to make an informed investment decision when we purchase a property. Plus, we believe in the hands on approach to managing real estate. We want to know our properties are properly handled and managed which is why we manage our own properties.
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How do I get paid?
The payment options are dictated by your investment goals and the type of property securing your investment. There are three possible payment options:

1.

Interest Accruing (You are paid when the property sells or yearly whichever comes first.)

2.

Quarterly Payments

3.

Monthly Payments

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Do I need a lot of money?
We do not have a "typical" Private Money Mortgage amount. As we acquire and sell properties, the need for Private Money Mortgages changes. In the past, we have needed Private Money Mortgages for as little as $10,000 up to $340,000. Private Money Mortgage amounts are determined by the property value and, if it is a rental property, cash flow.
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Who handles all of the details?
We do. It is our job to get you the proper documentation that protects your investment. All of this costs you nothing. If you make a $75,000 Private Money Mortgage loan, you will direct your funds to the closing agent or escrow agent, and you will receive a mortgage and promissory note for $75,000, as well as the other documents securing your investment.
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What documents secure my investment?
Your closing package will contain the following documents:

1.

A Recorded Mortgage

2.

A Promissory Note

3.

Hazard Insurance policy naming you as mortgagee

4.

A Property Summary to explain in detail the property securing your investment.

5.

Semi-annual updates from us to keep you up-to-date on the performance of the property securing your Private Money Mortgage.

6.

Added protection from S&S Investments, LLC - Life Insurance on Aaron Silverman, as the investment and property manager, that will pay off all Private Money Mortgages in the event the policy was to be executed.

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Is this a mortgage pool?
No. You make the loan against the property, and you receive a lien, in the form of a recorded mortgage and a promissory note, against the property. You are the bank.
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Is it a first or second mortgage?
Our preference is to have only one mortgage on each property, which would make your Private Money Mortgage a first mortgage. There are times when a Private Money Mortgage is placed as a second mortgage; however, the position of the Private Money Mortgage is fully disclosed to you before you make a decision to place a Private Money Mortgage on one of our properties.
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Is this a long-term investment?
Yes; however, it can be any length you want. We customize each Private Money Mortgage to meet the investment goals of each Private Money Mortgage Lender. Banks dictate the terms of traditional loans; conversely, you and I create the terms when we agree to conduct business together. Adjustable terms include length of the Private Money Mortgage, interest rate, interest only payments and so on. It is your money, and it is your choice.
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What if I want to liquidate?
This is a tough one for us to answer, and every potential Private Money Mortgage Lender asks it. You really should not invest in Private Money Mortgages unless you are planning for long term goals, and you have a financial plan (saving account, CD, etc) for emergencies.

That being said the answer is no and yes. It is mostly no, but if it is a concern, let’s discuss it, and maybe we arrive at an arrangement that fits your needs.
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Where can I find money to invest?
You can gather money from a number of sources:
     - Saving Account
     - CDs
     - Money Market Account
     - IRA (Self-Directed)*
     - Stock Investments
     - Partnership with Another Person

*If you have any questions regarding your plan or its administration, contact your Plan Administrator. If you need help transferring your IRA to a Self-Directed IRA, give us a call. We have located the best in the country and can provide you with their contact information.

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Summary
Private Money Mortgages are an incredible way to build wealth steadily and securely, and most people are not aware this type of investing exists. If Private Money Mortgages sound like they can help you meet your financial and life goals, we can get you started right now. While most people are complaining about the uncertainty of the stock market, you could be earning a consistent return on your money. Why accept the low rates on CD's and other low yield investments?

Hopefully, we have answered your questions; however, please contact us directly at (843) 277-1619 or email us if you have additional questions or would like to discuss Private Money Mortgages further.

Thank you for your time and interest, and we look forward to helping you get to where you are going. Good Money Growth to You.
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Aaron Silverman (S&S Investments, LLC): Real Estate Investor in Charleston, SC

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