Colorado Green Real Estate

How to Earn Fixed Rate Double Digit Yields with Private Mortgage Loans (Part 1 of 2)

A Welcome Alternative to Unpredictable Stock Markets

Investors are more often than not, at the mercy of the onset and departures of bull and bear markets. Today’s market is as definitive a bear market as can be recalled in recent history.

Many investors feel that their investments are simply not earning attractive rates of return, especially considering the risks of investing in securities such as stocks and bonds. Today, many investors witness their hard-earned capital and retirement funds shrink or even disappear.

With millions of baby boomers expected to take their money out of the stock market in coming years, retirement funds and pension plans are rapidly losing purchasing power. The results are record low returns for investors. With the recent economic downturn, many people are already beginning to feel the pinch.

Real estate is a safe and reliable investment, when purchased correctly, and it's an investment capable of producing superior yields while at the same time providing both security and liquidity.

At a time when traditional investments including retirement accounts, stocks and bonds are suffering record losses, private real estate investors continue to earn yields three to five times those earned by traditional investments even when markets are considered stable. And this is nothing new. Entire companies have been built around this investment strategy and those who've done it properly have grown to huge proportions. Private individuals can do it too.

Few Americans realize that they have the option to Self-Direct their IRAs and other retirement plans into real estate-and that they can benefit from the tax advantages those plans provide. IRA investments earn tax-deferred, tax-free profits. All that is required is to move the IRA funds to a custodian like Equity Trust, or EnTrust both of which specializes in Self-Directed IRAs.

Private Mortgage Lenders Earn High Yields

Private Mortgage Loan Interest rates are fixed for the term of the loan. The specific amount of the fixed rate for any given loan is determined by the length of the loan in addition to the lender's individual needs or requirements.

Some Private Lenders choose to receive monthly payments, for example, including principal and interest while others choose interest only which keeps 100% of the principal working for them.

The amount of Private Mortgage Loan interest paid is determined by the way the private loan is structured.

• Typical rates are fixed between 8-12% during the term

• Borrowers typically pay simple interest on monthly payments or compound interest when interest accrues.

• Short-term loans may vary between 6-24 months

• Longer-term loans may be 2 - 7 years or longer
  

In my experience, most Private Lenders prefer to defer receiving payments in favor of a single balloon payment at the end of the term because this earns the highest yields.

In the next post, I’ll outline how the Private Mortgage Loan process works and how private mortgages are secured. If you or someone you know are interested in learning more about private mortgage loans, please feel free to contact me with any comments or questions.

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