What do you do for investors?
We provide access to private buying opportunities that are not available to the public. These are premium investment-grade properties in hand-selected micro-markets that are most favorable for real estate investors. We’re perfectly positioned to take advantage of the biggest buying opportunity since the great recession. We have the team, a successful track record, and a proven model.
Is my money safe? What kind of security do you offer?
We secure our investors the exact same way a bank does when they lend money. You would get a mortgage (or deed of trust depending on what state you’re in) and a note specifying the terms of the investment. You will also get an upfront non-refundable option fee or down payment. If we are partnering on the deal we set up an LLC and joint bank account.
What exactly is Hybrid Real Estate Investing?
Hybrid Investing includes both short-term (1-3 years) and long-term (10 year) buy & holds with a pre-negotiated lease and option to purchase already in place. The resident has a good income and a sizable down payment. They have picked out the house they want to own and are responsible for most of the maintenance and repairs, so virtually all of the cash flow goes to your bottom line.
You will have a signed lease and a resident ready to move in the day you close and you’ll know how much profit you’ll make when they buy the house. The resident has major “skin-in-the-game” with the amount collected upfront, so we know they are serious about buying and will take great care of the property. The best part is you retain the tax benefits until they exercise their option to purchase.
What type of property do you invest in?
We select markets with high quality of life and vibrant economic growth and job opportunity. Transportation spending and highway funding are great leading indicators. At the asset level, we look for strong cash flow properties in the path of progress with high capital growth potential. We locate median-priced, single-family homes, at a discount and/or favorable terms, in nice neighborhoods that need little to no work. We handle the rehab when needed.
What does “turn-key” mean?
Turn-key means different things to different people. Our definition is a fully rehabbed property with a signed lease or lease-purchase tenant in place so you cash flow from day one.
Traditional turn-key providers are typically buying a cheap run-down property in a C or D-class neighborhood and spending as little as possible fixing it up, then putting a tenant in there with little if any screening, and selling it to you saying “Good luck.”
We are finding premium residents with a good income and a solid down payment who is serious about owning the house in a nice neighborhood that THEY picked out and we’re screening them heavily for you. Then we are treating them as a homeowner making them responsible for the maintenance and repairs so you get a cash-flowing equity building asset without the usual landlord headaches.
Can you use your IRA or 401k to make these loans?
Yes, you can. In fact, it’s a great use for them, and what better way to grow than tax-free? If it’s your IRA it must be self-directed. This is easy to accomplish. It’s only a matter of moving it to an administrator of your choice.
Now don’t worry, this is not a rollover with penalties from the IRS, it’s merely a transfer from one administrator to another. If you’re going to use your IRA to make loans you’ll find this a necessary step because most people have their IRAs housed with a company that will not allow them to make loans or in fact make any kind of investments other than what’s on their list. We call those multiple-choice IRAs not truly self-directed IRAs. With a self-directed IRA, you will be allowed to do what you want with your IRA and not what someone else insists you do that’s on their list.
If you’re using a 401K you must be in control of writing the check. You’ll find it difficult to get your employer to direct your company’s pension plan to private loans. They’re usually managed by stockbrokers with guidelines. They’ll do what they want and you won’t change their mind.
Now of course if you recently left a job that 401K belongs to you. They have to allow you to transfer to a traditional IRA if you so choose. So you might want to check that out and transfer to a self-directed IRA and start making private loans.
How do rising interest rates affect this investing model?
Rising rates are a reason to invest now and lock in your rate. Higher rates won’t affect your cash flow as we always build in a minimum amount. The residents we work with have good incomes and the rent we charge is in line with their expected payment when they secure their own mortgage.
Can I use a 1031 Exchange?
Yes, this method works very well with 1031’s. We are constantly marketing for new properties and usually have a few in the pipeline.
What percentage of tenant-buyers complete the purchase and what happens if they don’t?
We are very proud that around 85% end up buying and the ones that don’t usually have an extreme reason for not buying such as a death of a spouse, medical reasons, or job loss. If they don’t purchase by the deadline you keep their non-refundable option fee and have several options available to you.
- Give them more time by extending the lease
- Find another lease option buyer
- Find a long-term renter
- Turn it into an Airbnb
- Sell the property
Who handles the paperwork?
All real estate closings should be done by a real estate attorney, a title company, or an escrow company depending on the state. Your check will be made out directly to the closing agent for the gross amount of the loan.
All expenses will be paid by the borrower and will be deducted from the proceeds at the closing. Just like any loan done anywhere regardless of who the lender is. It then becomes the closing agent’s responsibility to receive your funds and make sure all documents are in place to secure your investments.
You’ll receive your package after the closing it should contain the original note and a copy of the original trust deed which will be recorded and mailed to you by the closing agent. So, you don’t do any paperwork. You simply commit to making the loan and get the money to the closing agent when it’s time.