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Frequently asked questions about the Texas real-estate market and lending options for private investors. If your question isn’t answered, please feel free to ask away!

What are the benefits of being a Private Money Lender?

Though the answer is ultimately contingent upon your goals, a significant benefit of alternative investments and private lending is that you have a security backed by real estate. You have tangible property versus stocks which can fluctuate with volatile markets. Another benefit is operating with hard money and earning a short-term yield. Essentially, you’re able to have a sense of liquidity with confidence that your return will typically take between 12 to 18 months.

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Can I use my IRA for Private Money Lending?

Many IRAs, 401Ks and pension custodians allow you to use qualified funds, you need only designate a self-directed IRA custodian to begin private lending. Once this occurs, you can lend with your IRA just as you would with cash.

What criteria do you use to underwrite a loan?

Streamline Funding, wholly owned by Noble Capital, conducts rigorous underwriting qualifications governed by the trusted “5 ‘C’s of Underwriting” to ensure that our Lenders are absolutely protected. These criteria are:

  • Credit – Credit is a measure of belief and anticipated reliability. We check thoroughly to ensure that lenders have good financial standing.
  • Character – We want to be happy to shake our clients’ hands. To ensure that everyone feels good at the end of the day, we also run thorough background checks on the local, state and national level
  • Credentials – It is important for our program that only experienced, knowledgeable clients are given the opportunity to both lend and borrow. A base level of experience is required of all clients.
  • Cash – We require the Borrower to bring cash to the loan.
  • Collateral – Collateral is the most important of the criterion as it is essential in backing up a deal if it should run into an issue. 70 percent of our decision is based upon the value of the collateral as this what protects the lender’s principal.

Once the five C’s are established, investors are subject to mandatory accreditation by the firm’s thresholds for entry into the funding network.

What is an accredited investor?

Accredited investors are individuals with income of at least $200,000 over the previous two years (or $300,000 with a spouse), or with assets worth at least $1 million outside the value of a primary residence. For entity investors, assets must total at least $5 million or be made up of a group of all current, individual accredited investors.

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Who is a typical private money lender?

A typical lender in the Noble Private Lender Network shares most or all of the following characteristics:

  • Recently retired or near retirement age
  • Accessible cash
  • Seeking diversification outside of current stock and annuities portfolio through alternate investing
  • Seeking consistent high-yield returns with low risk and volatility
  • Looking for collateral protection

Where do you lend?

We are Texas, born and bred. We operate exclusively in the Lone Star state. To ensure protection for our private lenders, we strategically focus in metropolitan areas. Should the housing market experience a downturn – which can happen cyclically – rural areas are less lucrative and protected. Generally, projects in urban areas are quicker to complete and sell versus rural areas. The markets we currently target are Austin, Dallas/Fort-Worth, Houston and San Antonio.

Why take a 14 percent loan as a real estate investor?

Many borrowers balk at interest rates hovering around 14 percent and wonder why they should take a loan with a high rate. Candidly, there are a couple of really good reasons. First, it can be difficult to secure conventional loans on distressed property in need of repair. A five percent interest rate over 30 years is a great mortgage rate, but a bank typically will not lend for properties outside of marketable condition. Private money lenders looking to make 14 percent interest on their money assist real estate investors through quick closings and short-terms loan tied to the ‘After Repair Value’ of the property.

Second, the velocity of cash – we go from handshakes to closings in two weeks – is an extremely fast valuation of your principal. This type of short term private lending is the difference between deals getting done and deals not getting done, which is why these types of loans are so popular.

Is it better to be a private money lender or real estate investor?

The biggest advantage is of being a private money lender is your input – or lack thereof. There is initial due diligence on the front end; however, once the project rolls out there is very little toil when compared with a real estate investor who manages the project from start to finish. Additionally, Noble significantly reduces the front and back end input demands for private lenders with our full-service platform. We also ensure that your payments are made so you do not have to chase checks.

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