As a real estate investor I dreamed of having a horde of rental properties but with prices where they are, down payment requirements, land-lording issues in some cases and finding good deals, I turned instead to private lending.
I liquidated my last property after completing two Rent-to-Own deals but have kept my Four-Plex as it is a JV deal that is too good to get rid of plus it keeps me in the game so to speak.
At this point in my life, I am looking to put more focus on my retirement goals and initially I thought I could do that by having rentals, however I realized that I like the low-key approach to investing rather than looking for great deals, trying to find partners with money and chasing down tenants for rent.
Private Lending has become a hot topic of late! Due to a variety of reasons, borrowers may need private loans due to insufficient income to qualify for a mortgage, debt consolidation, damaged credit and even people looking to borrow money against their equity. However in many cases the existing lender may not be willing to lend against that equity and therefore people turn to private loans for a solution. But it’s not always that easy or clear on how they work so let’s unravel the private lending world.
In Part 1, I will speak about the borrower and private lender. In Part 2, I will speak about how you as an investor can loan your money in private lending as an alternative to owning property.
At some point in an investors’ real estate investing career or journey, you will quickly run out of funds to keep investing in properties, so what can you do?
There are many ways to move forward but in my opinion one of the best ways is to Joint-Venture with another investor.
Check out a recent podcast I gave on the Joe Fairless show about Joint Ventures http://joefairless.com/blog/jf589-how-she-syndicates-mortgages-through-jv-deals/
What is a Joint Venture – essentially it is a method where partnerships are undertaken for people to pool their funds, their talents, their knowledge and their resources to in this case, purchase a property or grow their portfolio of properties.
I recently had an inquiry about purchasing an ocean-front property in Costa Rica? More and more Canadians are looking at investing in this beautiful country – I myself am very interested but holding off due to the dollar.
Living in Canada and especially in the eastern provinces, where it can get down to minus 40 or below, some of us tend to dream about living near the Ocean, in much warmer climates. I know I do! However, the question becomes is the reality a dream or a nightmare waiting to happen?
Being a real estate investor myself, I tend to be on the conservative side when it comes to my investment properties because the end result comes down to cash flow and protecting my investment.
Depending on whom you speak with there are many ideas of how to build a retirement nest egg. I have a specific plan for retirement that includes real estate. While many people still believe the stock market is the safer way to go, I decided long ago it was not for me.
For one, I did not want to invest and pay fees and for two I did not want to invest in the stock market, where I had relatively no control.
When I started out as a real estate investor, I thought that if I had the money and found “a” property, it would be easy to make money. I soon came to realize that there was so much more to be aware of – like finding the right property and knowing the right time to buy the right property. I thought that if I “timed” the market right that I would find a tenant quickly and life would be easy. Was I completely wrong? Well yes and no – let me explain!
It’s not unusual for Purchasers to get settled in their new home and get a Property Tax reminder stating they owe the whole years worth of taxes. Frightful right?
Just after moving in to her new home, my client received a notice in regards to the property tax adjustment and as a First Time Home Buyer, we had discussed this could happen so she did not freak out –completely!
Last week, I was contacted by a new client who lives and works in Richmond Hill. His renewal is up in November but he wanted to put some plans into place because he had just come into some money ($125,000 from an inheritance).
The balance on his mortgage is approximately $100,000 and he has approximately $500,000 of equity in his property.
I love brokering mortgages but I get frustrated when clients think that we are magicians and can make their deal happen just like that.
Unfortunately the lending climate has changed in Canada and no longer can we get a deal done with limited paperwork and a hand-shake. I think the problem is that while we as brokers have had to adapt to the new guidelines, our clients are unfortunately still in the dark and thus when we request paperwork (NOA, T1, T4, Financial statements, etc) it is very hard to get it from the client as they simply don’t understand the need for it or accept that it is the lender’s requesting it. When we try to explain or educate our clients, they are resistant as they were able to get it done when they bought their house 2-3 years ago, so how can it be so different now? Continue reading
The ‘Rule of 72′ is a simplified way to calculate how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double.
Let’s look at some examples of how long it would take to double our money in each of the following instances: Continue reading