The LTV (loan to value) is the ratio of the value of the property to the amount of the loan. The lower the LTV the safer the investment risk. As an example on a residential loan we generally go up to 65% of value on houses under $500.000. On houses over $500,000 we’ll only loan about 60% of the value and if the house is valued over $1,000,000 we’ll only loan 55% of value. We want to be conservative and make sure we are always well under market value which is a key factor in securing and protecting your investment.
Unlike stocks or bonds, where all you have to do is call up your stock broker and place a sell order and get your money in 5 to 7-days, real estate is not that liquid. You give up some liquidity for the safety of an investment secured by real estate. However, if an investor needs to cash in their investment early we are generally able to find a new investor within 30 to 45 days. In the event of a default and the investor gets the property back through foreclosure Brass Financial Group reserves the right to buy the mortgage note back from the investor for the full balance of the remaining amount due on the original note.
Yes and in fact this is a great way to get started investing in mortgage notes as you can invest what you feel comfortable with. Not everyone has the funds to invest the entire amount of the note for themselves as many of our mortgage notes are well over $100,000.00. With our participation agreements you have the option to invest what you want.
It’s always prudent for one to have a diversified portfolio. Private mortgage investments should appeal to anyone that wants the safety and security of an investment secured by a first mortgage position on real estate with a safe LTV and likes monthly income. It’s great for IRA’s, as there’s no income taxes to worry about.
Most residential mortgages that we fund are between $50,000 & $250,000 and the majority of the commercial loans are above $100,000.
Most terms for the majority of our private mortgages we originate are 6 to 12 months and are interest only payments with a balloon payment due at the end of the agreed term of the loan. However, most of the time they are paid off early, we probably average 4 to 9 months as most borrowers either refinance or sell the property.
Keep in mind our main business is residential & commercial loans to credit worthy individuals. If they can’t qualify for a conventional loan then we offer them a private mortgage. It just gives them another option. About 80% of our loans are referred to us by other mortgage brokers who can’t place the loan with a traditional lender. We love bank turndowns. We can close our loans in 7-10 days so that is the main reason someone would be willing to accept a higher rate on their mortgage. However, we are also quicker and easier than a bank with no red tape and cheaper than a partner that you would need to split your profits with 50/50.
The borrower is unable for some unforeseen reason or to make the monthly payments on time and defaults on the mortgage. If that happens, then we will have to foreclose on the property which can be a good thing as all of our mortgage notes are always in 1st position with a great LTV so there is a lot of equity/profit in the property. Many investors invest in mortgage notes hoping the borrower can’t pay. If this happens we will assist you throughout the entire process.
Nothing remember, the 1st lien position is 65% or less of the market value and since you hold the 1st lien, you get paid first. You can foreclose on the property and sell it yourself and if the borrower seller the property or refinances the title company at closing will contact you to get a current payoff letter and collect your funds for you at settlement and wire the funds directly to you. So it doesn’t really matter whether we are still in business or not your investment is safe and secure.
Yes, IRA Keogh and SEP Rollovers are acceptable. This is a great way to get more money in your retirement account. You will need to set up a self-directed IRA account with a trust company to receive the funds from your current trustee in order to avoid any tax consequences. We can give you the necessary forms to fill out if requested.
Real estate has a long history of outperforming most fixed income investments such as bonds or CD’s and even stocks. Pension funds and insurance companies invest billions of dollars each year in real estate mortgages as well as our own government, most of it is retirement money from individuals like yourself. If you want safety and income, this could be the perfect investment for you and your family and you will also be helping another family that needs the funds.
Yes, the title company and an experienced real estate attorney will prepare all the necessary legal documents to close the transaction. They will file the Deed of Trust for you at the courthouse, and issue a title policy in your favor guaranteeing a clear first lien title to the property. They will make sure all back taxes are paid and a hazard insurance policy is in place on the property. We can also act as the servicer on your mortgage note and collect the monthly payments and disburse all monies and make sure the property taxes are paid and a hazard insurance remains in place for your protection.
It’s easy, just call us and give us the dollar amount you want to place and we’ll tell you what we have available. You would then send a check to the title company and they would set a closing date, it usually takes 10 business days to complete. You can expect to receive your first monthly check about 45-days after closing.