Tag Archive for: private notes

Private Lending Warning #5


Private Lending Warning #5…FAKE OWNERS

How would you like to lend someone money on a property that you think you’re in a good, secure position with? But then you find out they never owned the property to begin with?

Trust me, it happens.

Everything looks great until payments don’t arrive, and you hire an attorney to foreclose on the property. That’s when you find out the borrower never owned the property and had no right to put a lien on it. Worse, if a lien was actually placed on the property that someone else owns, you will have the extra cost of releasing the lien.

Believe it or not, there are brazen thieves in the world who will fake ownership in properties. They might rent and/or borrow money on them.

So, where does that leave you and your money?

Unfortunately, by the time you discover all of this, most or all of your money will be gone. You’ll probably never find the person who stole it. If you do, they will likely have spent it all.

How do you protect you and your money from a fake owner?

Most thieves are always looking to talk you into a shortcut.

They will tell you, “It’s just a waste of money to involve outside resources for a simple process like a loan.” After all, you both can go right down to the county and record the mortgage or deed (aka, the lien). You can literally watch them hand the lien over to the county and get a receipt to prove it’s recorded.

Guess what?

The county does not check who owns the property when an item is recorded. They simply record what’s handed to them.

So, great. They recorded the lien, but the lien is not valid, and your money is not secured. More likely, it’s gone.

This is another reason you should involve outside resources on such a large money transaction.

The key to stopping thieves is to require every loan be closed, insured, and recorded by a title company. A title company will check and verify the borrower actually owns the property and you’re in the lien position you’re expecting.

If a thief is good and brazen enough to fool the title company, the title company will pay you back your money and write off the loan. But this only happens if you actually pay for a title insurance (aka, a loan title policy).

Title insurance gives you peace of mind that your loan is secured and valid.

Most thieves will never agree to this because they know they’ll get caught. To avoid getting caught, they will try talking you out of purchasing title insurance. They usually do this by pointing out the costs and time involved.

Regarding these so-called costs: If a borrower goes to a traditional lender or bank, they will pay thousands of dollars more than a private lender. So, the cost of title is on the borrower, not you. If they don’t want to pay for title insurance, then fine. They can find another lender and you can find a better borrower; someone who’s grateful and happy to pay a little extra to ensure your funds are secure.

Never listen to a borrower if they claim these costs are nonessential. A quality borrower will be focused on protecting your money by using third party resources, like a title company to close and record.


Check out:

Warning #1

Warning #2

Warning #3

Warning #4


Private Lending Warning #5

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Private lending Warning #4




Have you ever had a borrower need money now?

They have the deal of a lifetime and don’t have time to mess with using title for closing. They’ll even record the deed themselves to speed things along. After all, they have successfully closed hundreds of deals, so you can trust them to record your deed.



As mentioned above, thieves will try and claim title is just a waste of money and they would rather see you get a better return than throw it away using a title company.

For example, take a look at this $30-million-dollar scam that took place in western Colorado:

A scam artist raised over $30 million from local investors by promising them first deeds of trust on the properties he was buying. To save time and money (or so he claimed) he asked most of the private lenders to come into his office and complete the paperwork. He then took their money and gave them a loan and deed. Each lender thought they were in first lien position.

Unfortunately, they weren’t.

The borrower lied to all of them.

When the Feds finally showed up, all of these lenders were left with about $5 million to split. That might sound like a lot, but it wasn’t. Most of their money and investments had vanished. And it all happened because these lenders chose to trust the borrower and not use a title company to close their loan.

The few who did use title forgot to tell title a very important fact: “I want to be in first lien position.”

So, they too lost most of their money.

Yep, you read that right. If you don’t tell a title company you expect to be in first position, you might end up in a much lower lien position (like 3rd or 4th). That means if something goes wrong with the loan, you’ll have other lenders ahead of you that get paid first.


Never worry about saving the borrower time and money. Save your time and money from them.

(Check the FBI files to read more about the $30-million scam.)


Check out:

Warning #1

Warning #2

Warning #3


Private lending Warning #4


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Private real estate notes


Private real estate notes (aka, loans) are basic IOU’s from a borrower secured by a piece of real estate. So, instead of going to a bank for loan, a real estate investor (aka, borrower) will come to you.

You can lend the borrower all or some of the money they need to buy a property.


Just like they would a bank, a borrower pays you monthly interest.

Once the project is completed, the note is paid in full. “In full” means the borrower pays you back the full amount of the loan PLUS interest.

Congratulations! You just made more money in a safer way and in a shorter timeframe than you would’ve in the rocky stock market or other traditional methods (i.e. bonds, CDs, annuities).


Now, let’s dig in a little deeper…


Private real estate notes (or loans) are basic IOU’s from a borrower secured by a piece of real estate. They’re similar to the mortgage you have on your home…only now you’re the lender and receive the interest payments.


However, unlike your typical mortgage company, these loans come with better returns, more security, and the added bonus of making a positive impact on your community.


A proper private real estate note is secured against a property with a lien called a mortgage or deed of trust (depending on what state you’re located in).


So, instead of the borrower going to a bank for a loan, they come to you. You lend them the money and you receive the payments.


The difference here is you cut out the middleman who takes most of the profit: the


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