PML Frequently Asked Questions page:4
Is the IRS approved to use retirement accounts in this manner?
Yes, these are established tax guidelines, and it is completely legal. However, we always recommend the services of a custodian to invest retirement funds tax deferred or tax-free.
Who buys Insurance?
We do. We pay for a title search and also a title policy on the home, just as we would in a typical transaction.
What kind of insurance policy do you get on the home?
If we purchase a renovation, we get a builders risk policy (Vacant Dwelling Policy). In case of any damage, insurance distributions would be used to rebuild or repair the property, or used to pay you in the event of a total loss.
How much is it going to cost me to lend to you?
It is our policy to pay for all the closing costs so that your entire investment goes to work for you. We will pay for the closing agent, document preparation fees, notary fees, overnight mail fees, bank wire fees and recording costs. We do not charge any fees or commissions to our private lenders.
Will my money be pooled with other investors?
No, we do not pool funds. Your funding will be tied to one piece of property secured by a deed of trust.
If you default on the LOAN, HOW do I acquire the property?
In this unlikely scenario, we would simply transfer ownership of the property to you, if possible. If for any reason we did not (or could not), then you have all the legal rights of a secured lender. The best way to legally protect your interest in case of a default would be to hire an attorney. They normally would seek to retrieve your investment, any unpaid interest, any collection costs, all your attorney fees and maybe even more. An attorney could advise you of whether or not it makes sense to foreclose on the property or seek ownership to protect or recoup your investment.
PML FAQ