Protecting Our Private Lender’s Money
As you may know by now I buy most of my houses using private money from private lenders (yes, you can be a private lender) which is just a fancy name for someone that has extra money that needs a return. Private lending can be a great way to make your money work for you passively and secured by an asset…but the question I get all the time is: How is my money SECURED?? And that’s a great question.
Working with us means that we must build and maintain a trusting relationship, and our main job is to keep our lender protected at all times, because, if our lender is happy we are happy and we both get experience growth.
So, the first thing we do is always close with a professional title company. When we close with a title company we always run a title search to ensure the title is clean but we also purchase our lenders a lender’s title insurance policy. A lender’s title policy protects our lenders interest in the deal in the event there is a legal claim against the property.
Second, we always use a promissory note and deed of trust or mortgage. The promissory note is a legally binding contract that spells out the terms of the loan and basically means I owe my lender money. The deed of trust or the mortgage is a security instrument that ties the loan to the property and recorded with the county register of deeds, so if the lender doesn’t get paid they legally can take the house and all equity.
Finally, if you’re still not feeling protected at this point I have a life insurance policy, and I will happily add any of my lenders as a beneficiary. I want all of my lenders to feel that they’re money is protected at all times so we can work to grow their investment.
If you feel like this may be a good fit for you or you’re curious to learn more about the deals we’re doing and how you can get your money working for you give me a call or email me anytime 931-728-6721 Gabriel@kngprop.com.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” — Robert Kiyosak
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