Bi Solutions Private Lending 101

Private Mortgage Lending 101 … … Secure, Hassle Free, High Yields - Ron Nawrocki - Jim Williams – Joe Stachon Mortgage - Lynn Simonar – DHI Title

WELCOME We’re glad you found the time to be here Hopefully you’ll be glad you came! Feel free to ask questions during, at end, and 1 on 1 during our time wandering in the gardens

About Me Jim Williams, Senior Mortgage Consultant, Joe Stachon Mortgage Residential lending & refinancing Conventional & Jumbo FHA, VA, USDA Asset distribution income Use of self-directed IRA’s Partner with B.I.Solutions Corp. on using O.P.M.

Investment Disclaimer Nothing presented in this financial education seminar shall constitute the provision of investment advice by the presenters or any company sponsoring this seminar, and nothing provided or stated in the seminar should be interpreted as such. In addition to and not in limitation of the foregoing disclaimer, the sponsors will not provide investment advice regarding any specific security or fund during this financial education seminar and nothing should be interpreted as such. No specific recommendations for the purchase or sale of any particular investment shall be deemed given to any attendees of this financial education seminar, and the mention of any particular security or investment is for example only.

Outline Brief Introduction What is a Private Lender? Why do it? How? … an overview Legal, Tax, Risks Simplified, Safer Lending Wine down!

Introduction How do banks make money? Borrowing cheap – lending for more ! Do you think you could make money … Borrowing at 0.5% … typical CD Lending at 5.5%? … typical mortgage How about lending at 6.5%? … real estate investors pay 1% more

Bank Example … residential loan Banks make money on us! $ 8,000 $ 8,800 $ 800 Annually $ 667 $ 733 $ 67 Monthly 5.0% 5.5% 0.5% Interest rate $160,000 $160,000 Amount Profit Lend Borrow

Bank Example … investor loan Banks make more money on investors! $ 9,600 $10,400 $ 800 Annually $ 800 $ 867 $ 67 Monthly 6.0% 6.5% 0.5% Interest rate $160,000 $160,000 Amount Profit Lend Borrow

Example … loan using O.P.M. An opportunity to earn using O.P.M.? $ 1,600 $10,400 $ 8,800 Annually $ 133 $ 867 $ 733 Monthly 1.0% 6.5% 5.5% Interest rate $160,000 $160,000 Amount Profit Lend Borrow

Conventional wisdom … The year 2005 … Invest with big name gurus with high returns You can’t get ahead with guaranteed fixed return investments MYTH

Reality on gurus with high returns … Some are crooks Know who you’re dealing with Read what they’re investing in

Who is Ron (The Ronald) Nawrocki? Phoenix area resident since 2007 Lived & worked in Europe from 1994 - 2007 Cornell Univ. Engineer and MBA in Finance Manager at Xerox, Scott Paper, Bell Atlantic CFO at Pepsi, Hortex, Pioneer Investments, McLane Rotarian, Toastmaster, Who’s Who of Entrepreneurs, AZREIA, SW Valley Chamber, CrimShield, BBB Author – “Investor Insights” in Hungary & Poland Investor – 30 years Full-time investor since 2001, CPS since 2007

Evaluating any Investment … 4 tests Liquidity Safety Rate of Return Tax Consequences Other: Social benefit Will Rogers: "I am more concerned about the return of my money, rather than the return on my money”

References … “ MAKE YOUR MONEY “PRIVATE MORTGAGE MAKE MONEY FOR YOU” INVESTING” - Amarjit Ahluwalia - Teri B. Clark & Matthew Stewart Tabacchi

What is a Private Lender Survey … How many here are Private Lenders? Any famous examples? Warren Buffett Carlos Slim

Carlos Slim Interested at 14%?

Definition … A private individual or company lending money against some collateral Examples: Bank CD’s … collateral is FDIC Bonds … company assets as collateral Loan to your relatives … collateral? Tax liens – up to 16% in Arizona How many here are Private Lenders?

More examples … “ Hard Money” loans to real estate investors … backed by deeds Mortgage loans on income producing real estate … backed by deeds Loan backed by Mortgage Loan (Deed) Collateral Assignment These are Private Mortgage Loans

Why be a Private Mortgage Lender? Bank CD’s pay you ( private lender ) 0.5% - 1.5% Real Estate investors pay banks 6.0% - 7.0% Cut out the middle man - earn 5.5% - 18+% Why did Carlos Slim lend to NY Times vs. put money in CD’s?

4 Tests for any Investment Liquidity Monthly interest checks Can have short maturities (6 mo. – 10+ yr.) Can be sold or used to get Loan Safety Backed by Deed, Title policy, Insurance Real estate does not go to zero Value does not drop as interest rates rise

But Banks are in trouble … Do NOT: Sell your loans with Credit Default Swaps Lend 100% of the purchase price Give the buyer Title to live in the Property

But Banks are in trouble … Lend only : On income producing real estate ( not owner occupied) To investors with good credit & assets With a Corporate and/or Personal Guarantee

4 Tests for any Investment Rate of Return 6.0% and higher Linked to mortgage rates for investors Taxes Fully taxable O.P.M. used is tax deductible Unless in an IRA

‘The Ronald’ on Problems … Biggest Problem – Banks aren’t lending

‘The Ronald’ on Problems … Biggest Problem – Banks aren’t lending There are no problems – Only Opportunities disguised (Pepsi mantra) (1+2) Banks aren’t lending is the Biggest Opportunity – For Who? Private Mortgage Lenders !

4 Tests for any Investment Social Benefit Private Lenders help the Economy … more than the Government !

The Benefits … We help people make money in Real Estate … Who? Home buyers who can’t get a mortgage Fix & Flip Investors Cities & Towns Realtors Mortgage Brokers Title Companies Private Lenders ! Electricians Plumbers Inspectors Appraisers Painters Landscapers Bank shareholders! Investors ! Phoenix Economy!

How? … an overview YOU are the Bank ! Find & Check Borrowers Evaluate the Deals Determine what YOU want Negotiate & Agree T&C’s Close with Title Company Cash your checks !

Know the Documents Note: Your agreement with Borrower Personal Guarantee or Recourse Property Taxes & Insurance kept current Trust Deed: Pledges property if Note T&C’s not met Must be recorded Lender’s Title Insurance Insurance: You must be Co-beneficiary or Mortgagee Lender’s Instructions: How you want the deal handled Good News: Title Company handles all these !

Find Borrowers Banks aren’t lending – Borrowers everywhere Tell your network you are Private Mortgage Lender Attend Business Mixers, Investment Clubs Tell Real Estate Agents, Appraisers Mortgage Brokers? Simplest: Call ‘The Ronald’

Check Borrowers Experience in Real Estate Are they making money? Credit Report/Score References, BBB Visit properties (Current & Past) Do they know more than you?

Evaluate the Deals … Fix & Flip vs Income Producing Size of loan vs Your funds available Terms requested Location – NOT too important Condition of property Review a few before Lending

Determining Value (ARV) Appraisal Most accurate, Most expensive Difficult in Today’s Market MLS (imapp) Comps Square Footage & Value basis Some neighborhoods have only REO (bank owned) sales

Determining Value (Cnt’d) County Appraiser, Recorder & Taxes http://www.maricopa.gov/Assessor/Parcel Application http://recorder.maricopa.gov/recdocdata http://treasurer.maricopa.gov For Income Producing Value based on Rental Income Hint: Value ~= 120 rent payments

Mortgageable Equity or Investable Equity Not for Fix & Flip – Key for: Income Producing Property Lending against Mortgage Note Factors in Equity , LTV ; Interest rate(s), Cash Flow to make all payments Best Ref: Greg Pinneo (approx. $3,000 course)

To do it on your own … Come to our 4 hour course - $49 You’ll be ready to start looking for Clients that day We have TOO MANY Clients! Banks aren’t lending … great opportunity

Outline Brief Introduction What is a Private Lender? Why do it? How … an overview Legal, Tax, Risks Simplified, Safer Lending Wine down!

Legal Aspects Private Lending is not complicated Title Co. handles most paperwork B.I.Solutions has Lawyer retained with volume of loans taken & made – will soon get: SEC registration Hard Money lender license Mortgage Pools require SEC registration – Avoid

Legal Aspects Lending to investors: “ Commercial loan on Residential Property ” Does not fall under residential mortgage licensing Several lenders partnering - Use LLC NOT mortgage pool Simple Operating Agreement to designate % Or Largest takes 1 st position, next 2 nd …

Tax Aspects Interest Earned is fully taxable Income tax deferred/avoided if loan in IRA Must be self-directed Borrower (if Company) should issue 1099-INT Private Lender, like Financial Institution, must issue 1098 & 1096 to individual borrower Can issue for company

Tax Aspects Using O.P.M.: must issue 1099-INT & 1096 to private lender to be investment interest (tax deductible), except Corporation – Bank or B.I.Solutions Using mortgage or HELOC Credit Card 0% offer - transfer directly to borrower

Risks Lower risk than tax liens, bonds, stocks, angel investing, private equity, personal loans … Borrower Performance (You’re the bank) Foreclosure cost $2,000 - $4,000 Handled by Lawyer or Title Co. Property Valuation Cost & Time to resell property Money on the side-lines earning ~0%

Do it Yourself Lending Property? Property Property Client Client Client? ? ? ? Lender

Simplified Lending Prop1 Prop2 Prop3 … PropX Client1 Client2 … ClientY B.I.Solutions Lender Lend2 Lend3 … LendZ

Simplified Lending … B.I.Solutions Corp. Plus: No need to find & check Clients! Local, with track record of success, references Backed by $multi-million portfolio, strong cash flow Guaranteed repayment & interest payments Regardless of Client payment Referral based Clients calling weekly Handles Credit checks, Valuation, Mortgageable Equity

Simplified Lending … B.I.Solutions Corp. Plus: Chooses the best tenant/buyers and borrowers to fund Handles all tax filings (except 1096 signature) Including those for OPM borrowed Low $10,000 Minimum – many loans to chose from Minus: Slightly Lower interest rate – How’s your wife? But much higher than CD’s, T-Bills But money invested the whole term Only residential properties (for now) Minimal involvement in multiplex apartments

The Business B.I.Solutions Corp. - 2 Divisions … Buying Solutions – Home buyers – who can’t qualify for a mortgage Investing Solutions – active real estate Investors who need “Fix & Flip” loans Banks aren’t lending – we have backlog of Clients

1. Fixed Rate*, guaranteed “ BI MP3” 6 mo.– 6.0% ( No early withdrawal penalty) 12 mo. – 6.5% 3 yr. – 7.0% Monthly interest checks … $10,000 minimum Investment backed by full portfolio of properties Plus my personal guarantee * Rate based on investor mortgage rates at time of investment

2. Fixed Rate*, guaranteed Investment backed by a specific Deed plus my personal guarantee 12 mo. – 6.5% 3 yr. – 7.0% Creative investing: Convert Bank CD, earn $00’s more Take mortgage on home and earn $000’s/yr. * Rate based on investor mortgage rates at time of investment

Some Trust Deed Loans Loan to Value (LTV) 65%; 1 yr ; 6.5%* Phx03: $130,000; 4-plex; collateral assignment Phx04: $180,000; 3-plex; “ Phx05: $94,500; “ Phx06: $ 94,500; “ AvonX: $100.000; “ (pending)

Toll1: 9416 W. Williams St 1,761 sf; 3 Bdrm / 2.5 bath Parcel: 101-27-602 $1,295 lease payment (25% rebate) Cash flow of $269/mo Option for $194,900 – $205,470 Current 1 st position loan - $114,000 Mortgageable Equity (6.5%, 90% LTV): $26,000

Some Trust Deed Loans Loan to Value (LTV) 90%; 3 yr ; 7.0%* Toll1: $ 26,000; 2 nd position $140,000; 1 st position Toll2: $ 29,500; 2 nd $146,000; 1 st Avon1: $ 32,000; 2 nd $150,500; 1 st Glen1: $145,800; 1 st (best deal)

More Trust Deed Loans Loan to Value (LTV) 90%; 3 yr ; 7.0%* Phx02: $145,500; 1 st (pending) Mesa2: $162,000; 1 st position VerrX: ~$215,000; 1 st (new) Phx04: $500,000; 7-plex; 1 st * Interest Rate & payments guaranteed, regardless of Client’s payments

Bribe to fill-out Questionnaire … We need your feedback to improve the seminar If you fill-out the form: Enter in today’s drawing We cover your CD pre-payment penalty to get into a similar maturity Private Loan with B.I.Solutions (thru 6/30/2009) We buy you dinner for people you refer that become B.I.Solutions private lenders (they might buy you 2 dinners!)

Contact Ron Nawrocki (The Ronald) B.I.Solutions Corp. Verrado 1-623-249-4792 [email_address] www.TheRonald.us P roven, P rofitable, and P ositioned for Growth

Security – Private Mortgage Loan Any Private Mortgage Loan (should) have: NOTE DEED OF TRUST LENDER’S TITLE POLICY PROPERTY INSURANCE B.I.Solutions also provides: CLIENT INCOME B.I.SOLUTIONS CASH FLOW & ASSETS RON NAWROCKI’S PERSONAL GUARANTEE

4 Ways to Invest in Real Estate LOAN OWN Do Nothing Lending Fix & Rent Mortgage Lease-to-Own Private Fix & Sell

B.I.Solutions’ Investments LOAN OWN Do Nothing Lending Fix & Rent Mortgage Lease-to-Own Private Fix & Sell

Using IRA’s IF you have a choice which money to use: Use IRA - these are fully taxable: 1. Fix & Sell 4. Private Mortgage Lending Use taxable money - these have tax breaks: 2. Lease-to-Own 3. Fix & Rent

Bi Solutions Private Lending 101

More Related Content

What's hot

Viewers also liked

Similar to Bi Solutions Private Lending 101

More from Ronald Nawrocki

Bi Solutions Private Lending 101