PML Frequently Asked Questions
What is private lending?
When we have isolated a home priced well under market value, we give our private lenders an opportunity to fund the purchase and rehab of the home. Lenders can also earn high interest rates - generally 4 or 5 times the rates you can get on bank CDs and other Traditional Investment Plans.
How is the money used?
On a new home purchase requiring renovations. The cost will be allocated to the purchase price, renovations, carrying costs, cost to resell, and also a small buffer for unexpected expenses.
Why don’t you get a traditional loan?
There are many reasons, but the primary reason is: time and negotiation leverage. Many of the homes we are purchasing are in need of a quick sale within 10-14 days. A traditional bank requires 30-45 days to close a loan. Also, our leverage is far greater when we purchase using cash instead of financing. Many traditional home sales fall out of contract because of financing issues; and this allows us to negotiate a much lower purchase price and reduce our risk.
Lending guidelines are also continually changing. Most new requirements include applications, approvals, junk fees, and strict investor guidelines. They also limit the number of investment properties that can be purchased by one company.
How can you afford to pay such high returns?
We make our money on the purchase, and this allows us to purchase 20-30% below a retail purchaser. This instantly creates thousands of dollars in equity. Typically, we also cut out the middleman in a transaction, i.e., commissions, mortgage broker fees, loan fees. Our attorney costs are usually also lower, because there is less paperwork to review.
PML FAQ