This exact photo is only possible through working with private lenders!
How Private Lending Works
A property is in escrow for purchase and/or has already been purchased
I create a lending packet explaining what the project entails such as what type of renovation or build costs we plan on expecting
I work with committed private lenders like yourself that are interested in the project and draft the correct paperwork such as the promissory note and mortgage deed to fund the escrow account
Sign and notarize paperwork
Escrow closes and we begin the renovation or new construction process
ACH monthly payments are automated to your specified account for the 12 month term
Continue the project to completion
Upon sale of the project the principal amount will be released
The Importance of 12% Compound Interest
To understand how money doubles every 6 years at a 12% interest rate, we need to consider the concept of compound interest and the Rule of 72. The Rule of 72 is a simple way to estimate how long it will take for an investment to double, given a fixed annual rate of interest.
Here's how it works:
The Rule of 72: Divide 72 by the annual interest rate to get the approximate number of years it will take for the investment to double.
Years to Double = 72 divided by your interest rate
So, with a 12% interest rate:
72 divided by 12 = 6 years
According to the Rule of 72, it would take approximately 6 years for the money to double at a 12% interest rate.
$100,000 in 6 years would be $197,382 if compounded and not withdrawn
$1,000,000 in 6 years would be $1,973,822!
Private Lending Sample Investment Amounts
$100,000 at a 12% APR rate would return $1000 a month
Approximately, 1% each month and their are 12 months in a year!$50,000 at a 12% APR rate would return $500 a month
Approximately, 1% each month and their are 12 months in a year!$25,000 at a 12% APR rate would return $250 a month
Approximately, 1% each month and their are 12 months in a year!
This is normally a greater return than MOST rental properties in the state of Hawaii.. This is the 1% rule!
Secured and backed by the real asset!
Not sure what the 1% rule is?
The 1% rule in real estate investing is a quick guideline to evaluate rental property cash flow. It suggests that the monthly rent should be at least 1% of the property's total cost (purchase price plus renovations).
Example: For a $200,000 property, you should aim for at least $2,000 in monthly rent.
That means for a $1,000,000 property in Hawaii you should earn $10,000/mo. This is very hard rent to get and is highly unaffordable!
That also means $5000/mo for a $500,000 property!
