Investing in real estate is essentially one of the smartest and safest strategies to promote wealth building. If you have money in a 401K, IRA, home equity, line of credit, or cash savings, then you should consider becoming a private investor, also known as a “private money lender”.
A private money lender is someone just like you, who makes loans to real estate investment firms like us. We secure your investment in residential real estate development, which offers you the same type of underlying security and profit potential as it does for us, but without you having to do any of the work, because we do all of the heavy lifting.
In other words, let’s say for example you want to flip houses but you don’t know how to. Or maybe you do know how, but you just don’t have the time. Or perhaps you’re out of state and you want someone local in New York to flip houses for you. Well, that’s where we come in. You provide the money and Rowen Giles will do all of the work. You simply sit back and collect your profits.
Our team of seasoned real estate experts will provide you with a summary of a property, including a comparative market analysis, so that you can make an informed decision. From there you’ll get signed up as a private lender with Rowen Giles LLC, which will allow you to invest as little as $200,000 per property and collect anywhere from 7-15% return on your investment. Compare that to the 1-2% that you’re earning now with your cash sitting in a savings account.
Once you wire the money to escrow, we will give you a complete investment package that includes a title report of the property, loan disclosures, a recorded promissory note and a mortgage lien with your name on it against the property to secure your investment. Hazard insurance and full title insurance will also provide you with security.
You will enjoy monthly interest payments for the term of the investment, as well as quarterly statements to review your investment performance. And as a private lender with Rowen Giles LLC, you will receive our world class customer service and professionalism.
Contact us today at (212) 991-8720 to discuss more information about our investor program and begin investing in real estate with Rowen Giles, LLC.
Frequently Asked Questions
What is a private lender?
A private lender is someone who loans money for real estate development and earns a profit by collecting interest payments on the loan. When we find an investment property, we give our private lenders an opportunity to put their money in it. Private lenders collect anywhere from 7-15% interest on their loan, which is way more than what they get by letting their money sit in a 401K, IRA, CD, and other traditional investment plans. Anyone can be a private lender. If you have money in a 401K, IRA, home equity, line of credit, or cash savings, then you should consider becoming a private money lender with Rowen Giles LLC.
How is the money used?
On a new home purchase requiring renovations. The cost will be allocated to the purchase price, renovations, carrying costs, cost to resell, and also a small buffer for unexpected expenses.
Why don’t you get a traditional loan?
There are many reasons but the primary reason is due to time and negotiation leverage. Many of the homes we are purchasing are in need of a quick sale within 7-30 days. Whereas a traditional bank requires 30-45 days to close a loan. Also, our leverage is far greater when we purchase using cash. Many traditional home sales fall out of contract because of financing issues, and this allows us to negotiate a much lower purchase price and reduce our risk.
Lending guidelines are also continually changing. New requirements include applications, approvals, junk fees, and strict investor guidelines. They also limit the number of investment properties that can be purchased by one company.
How can you afford to pay such high returns?
We make our money on the purchase. We may pay very high returns, but it allows us to purchase 20-30% below a retail buyer. That instantly creates thousands of dollars in equity. Also, typically we cut out the middleman in transactions, such as agent commissions, mortgage broker fees, and loan fees. And our attorney costs are lower because there is less work for them to review.
Are you really helping sellers?
Absolutely. With your cash funding we can offer something very few buyers can. We are buying on their timeline in as little as 7-30 days. Knowing that we’re going to renovate the home and buying in as-is condition is a very important factor to most sellers of distressed properties. They also won’t have to pay any additional fees.
What if the market gets worse and values go down?
This is a great question and valid concern. However, our strategy is not to speculate 3 years down the road. Our goal is to purchase quickly and sell even faster. Most of our projects are complete in 1-2 months and will be sold in 4-5 months. The real estate market doesn’t shift that dramatically in a matter of months. It typically takes 3 to 10 years or longer for an area to decline. And remember, we’re buying in strategic areas where inventory is already low and demand is high; this further minimizes our risk.
What interest rate do you typically pay your private lenders?
We currently pay 4-5 times what a typical bank CD is paying. Our rates will fluctuate very little depending on the purchase price and rehab involved. Most of our lenders are paid from 7%. The lower the purchase price, we can sometimes afford to pay a little higher rate to make sure our lenders make it worth their time.
How long will my funds be held?
The majority of our loans are set up on an 8-12 month note, but it depends on the size of the project. For example, if we’re doing a teardown and rebuild, then we’ll have to wait on building department approvals, as well as zoning and planning board approvals. A project like that will be delayed. But, we account for all of those details upfront and will give you an estimated time frame for the return on your investment.
What if you’re on a short term note and sell the home after only 1 month?
It’s extremely important to us that we do not waste your time. However, occasionally, situations may occur where we find a buyer immediately. In this scenario, we provide you with two options: we can either move the note to another property, or provide you with a minimum of 3 months interest. Most lenders see the strength of our purchase and sell ability at that point, and simply move the note to another property.
When will I receive payments?
On a short-term note, we pay one large lump sum at closing. This is much easier to manage for both of us, especially if you’re investing out of a retirement account. On a longer note, we will pay monthly, just like a typical mortgage.
Is there a guarantee on my investment?
No. There is no government backed guarantee on these privately held real estate notes. You’re deriving protection from the equity in the real estate. If at any time we were to default on the note, you have legal right to take the home (essentially foreclose on us). We always plan for the worst, and our homes have thousands of dollars of equity in them; so the worse case scenario, often times is we don’t make “as much” as we hoped for.
Does the IRS approve use of retirement accounts in this manner?
Yes, these are established tax guidelines, and it is completely legal.
Who buys insurance?
We do. We pay for a title search and also a title policy on the home, just as we would in a typical
What kind of insurance policy do you get on the home?
We purchase title insurance and hazard insurance. In case of any damage, insurance distributions would be used to rebuild or repair the property, or used to pay you off.
How much is it going to cost me to lend to you?
It is our policy to pay for all closing costs so that your entire investment goes to work for you. We will pay for the closing attorney, document preparation fees, transfer fees, notary fees, overnight mail fees, bank wire fees and recording costs. We do not charge any fees or commissions to our private lenders.
If you default on the loan how do I acquire the property?
In this unlikely scenario, we would simply transfer ownership of the property to you, if possible. If for any reason we did not (or could not), then you have all the legal rights of a secured lender. The best way to legally protect your interest in case of a default would be to hire an attorney. They normally would seek to get your investment back, any unpaid interest, any collection costs, all your attorney fees and maybe even more. A legal representative could advise you if it makes sense to foreclose or seek ownership of the property to protect or recoup your investment.