While waiting at my chiropractor's office yesterday, I watched Jim Rohn, talk about his "Ant Philosophy". Jim Rohn is kind-of-like a preacher for business people and entrepeneurs. The Ant Philosophy is based on the habits of a common ant. In the summer, ants work hard, and persistantly to gather up as much as they can for the winter. In the winter they sit back and enjoy the fruits of their labour.
Many people who work in real estate, do the exact opposit of the common an. It's natural to work hard during the spring real estate market and then do little in the summer. That's where I see real estate professionals, be it realtors, other mortgage professionals, home inspectors run into financial difficulty.
The Ant Philosophy is similar to Warren Buffet's mantra of doing the exact opposit of what others do. If you've ever tried this in your own life, you'll see how challenging it can be. Peer pressure is intense.
How does this relate to real estate and mortgages? For example, if you have a variable-rate mortgage with an amazing rate of under 3%, instead of riding out the mortgage because everyone is complementing you on the rate, look at locking in before rates go up...try the ant philosophy.
If you'd like to discuss your mortgage (or the Ant Philosophy), please call me at The Mortgage Centre 519-763-3900 ext.1001 or e-mail at lastovic.s@mortgagecentre.com.
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Friday, July 27, 2012
Monday, May 7, 2012
Private mortgages...here's an interesting investment...
If you’ve owned real estate in the past, you know what a good investment it is. The key to investing in private mortgages successfully is to work with a mortgage professional that can review the application and make a balanced recommendation.
If you’re interest in putting your money into an investment with good returns and relative low risk, than a private mortgage is a good option. I have a private lender who boasts that in three years we converted his money from one million to $1.5 million.
I get questions regularly from individuals interested in lending money to high-risk borrowers. Here’s a summary of the things you need to consider when putting your money into a private mortgage:
1. Does the mortgage professional have a good understanding of the applicant?
I normally collect as much information as possible on the borrowers. If I have a good understanding of the applicant and their current financial situation, I believe I can advise the private lender accordingly. We pull a credit history to get a picture of the applicant’s credit repayment. Most borrowers’ who need private mortgage loans have had credit issues in the past. We also collect relevant income and tax information that we provide to the private lender.
2. Who conducted the appraisal? What comparable properties did they use?
Understanding who did the appraisal and what comparable properties they used is key. Most private lenders will lend to 85 or 90 per cent of the value of the property. The appraisal will give you an unbiased value of the property, which may be different than the value a real estate agent would have. Most private lenders will drive by the property and inspect the property themselves.
3. What is the long-term potential of the borrower paying-out the private mortgage?
I believe private mortgages are a short-term, band-aid for the individual borrowing the money. Ask the mortgage professional you are working with, if they’ve discussed a plan with the borrower to pay out the private mortgage. In most cases, if the borrower’s credit history improves in a year than the private mortgage can be paid out. Other times the borrower’s financial situation requires a long-term plan.
As with anything else, ensure you do your “homework” when working with a mortgage professional and lending money as a private mortgage.
If you’re interest in putting your money into an investment with good returns and relative low risk, than a private mortgage is a good option. I have a private lender who boasts that in three years we converted his money from one million to $1.5 million.
I get questions regularly from individuals interested in lending money to high-risk borrowers. Here’s a summary of the things you need to consider when putting your money into a private mortgage:
1. Does the mortgage professional have a good understanding of the applicant?
I normally collect as much information as possible on the borrowers. If I have a good understanding of the applicant and their current financial situation, I believe I can advise the private lender accordingly. We pull a credit history to get a picture of the applicant’s credit repayment. Most borrowers’ who need private mortgage loans have had credit issues in the past. We also collect relevant income and tax information that we provide to the private lender.
2. Who conducted the appraisal? What comparable properties did they use?
Understanding who did the appraisal and what comparable properties they used is key. Most private lenders will lend to 85 or 90 per cent of the value of the property. The appraisal will give you an unbiased value of the property, which may be different than the value a real estate agent would have. Most private lenders will drive by the property and inspect the property themselves.
3. What is the long-term potential of the borrower paying-out the private mortgage?
I believe private mortgages are a short-term, band-aid for the individual borrowing the money. Ask the mortgage professional you are working with, if they’ve discussed a plan with the borrower to pay out the private mortgage. In most cases, if the borrower’s credit history improves in a year than the private mortgage can be paid out. Other times the borrower’s financial situation requires a long-term plan.
As with anything else, ensure you do your “homework” when working with a mortgage professional and lending money as a private mortgage.
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