I Buy Florida Houses I Buy Florida Houses
Return On Investment For Private Mortgage Investors

Of course, there are no "no-risk" guarantees in real estate either. Your goal should be a solid return for a low risk.


What happens investor does not stay current on interest payments?

You have a collateral (property) that is well more than the value of your loan. In worst case scenario where the property has to be foreclosed, it will pay off your loan and pay you a substantial amount of equity in addition.

  • The market value of the property
  • Estimated repairs, if any
  • Proposed use of loan proceeds
  • Interest payments to you
  • How the profit / equity will be divided

In other words, you get so well educated on the deal that you are unlikely to have just "a leap of faith".

Compare this to investing in a mutual fund; you only have a vague idea where your money will be invested.

  • There are no "Instant Riches"
    While we are always working for a generous return with a low risk, we do not promise instant riches

  • Risk is not an option
    Your investment is covered with a collateral that is higher than your investment.

    Should you be forced to take the property to cover your investment, you now may potentially receive much more than your investment back.

    But as with any investment, that is not to say it has zero risk.

    The bad news is you may have to wait through a market cycle before you receive it back.

    If risk is not an option for you, then any type of investment may not be for you, including real estate.

  • You are in a cash crunch
    If you need your money pretty soon to put your kid in college next fall, don't invest it. You may not get it back in time.

    The longer you can have your money invested and working for you, typically the higher returns you can generate.

  • You are a first timer
    It's typical to be more nervous if you have never invested before. You must weigh the risk and possible returns before investing.

    If you are nervous, and prefer daily updates like stocks in the daily news, private investing is not for you.

  • You already invest
    If you already investment in other types of investments, then private lending in real estate is definitely worth looking into.

    As you create more diversity rather that having all your eggs in one basket, you will find you get a better return on your investment in real estate, with more peace of mind.

 


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