Investor/ Securitized Property Lending

Investors are constantly seeking ways to diversify their portfolio and have their investment monies produce the greatest return on their investment.  Investors are always looking where to invest; the stock market is one place, but it is volatile and goes up and down.  Normally, higher returns come with higher risk for an investment.  Many seniors have a significant amount of savings that they normally maintain poorly invested or invested in financial vehicles which produce little to no return, such as certificates of deposit commonly known as CD’s, which are relatively safe conservative investments.  We work with investors, many of whom are seniors in finding investment vehicles which produce a higher rate of return with the relative safety of being securitized by a property as collateral.

Securitized Property Investment

A securitized property investment allows an investor to provide a loan for a person or company who is buying a property who normally does not qualify for a conventional loan.  The purchaser may be a foreigner or a company with little or no history in the United States, partly for which reason banks may have denied their application.  Basically, the investment works very much like a real estate closing where the title is reviewed, the property is cleared of any liens, an appraisal is made for the property and the investor, just like a bank, receives a note from the purchaser/mortgagor, along with a first mortgage in which the property serves as collateral.

What is the Rate of Return (ROI) on the Investment?

Typically, the loans are at a higher interest rate than the current market or what a conventional loan would provide.  An investor in this type of investment lending can typically on average earn anywhere between 6% to 13%.

How Long is the Investment/Loan?

The timeframe for an investment is usually a minimum of one year but can vary depending on the needs of the purchaser/mortgagor and the lender’s needs.

What is the Risk?

The risk is limited in that the mortgage on the property guarantees the loan and the loan is usually much less than the market value of the property.  The biggest risk is if the purchaser/mortgagor defaults or doesn’t pay back the loan, the lender will have to initiate foreclosure proceedings which can take some time for the investor to receive his monies but eventually the lender will have his monies returned plus interest and costs.  The mortgage would contain various clauses to minimize the risk of loss and would increase the interest during the default to the maximum rate allowable by law which is currently 18%.  Additionally, it would provide for attorney’s fees and costs to be paid by the mortgagor, which effectively are paid at the sale of the property in foreclosure.

G&R Law and securitized investment

G&R Law does not provide any investment advice and urges any potential investor to seek independent financial advice from a licensed professional before making any investment decision. G&R Law provides its clients with its knowledge and a legal platform for clients to feel safe and protected and to facilitate these types of investments.

For more information, please do not hesitate to contact us through our Contact page.