Investor Forms and FAQ's
Here investors can find the answers to their questions and download forms to assist in the process with Atlas Pro Financial.
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What is private lending?
When you want to borrow money for a real estate note we’re buying, we give our private lenders an opportunity to make us the loan… and earn high interest rates that are substantially higher than you can get on bank CDs.
How is the money used?
We have opportunities to fund new purchases of notes, modify them if necessary, and get them re-performing. We then may use a variety of exit strategies to pay you back. We will NOT be using the money for the operating expenses of the company, rather strictly for the acquisition of notes, and any related expenses necessary.
Why?
Banks and other lenders require applications, approvals and must follow guidelines imposed on the banking industry. Then there are limits to the number of loans they want to make to any one company or investor. On top of that, the time it takes for their approval process is never certain.
We can move much faster without these limitations by using private lenders. That allows us to negotiate more profitable deals with our sources while offering a quick and easy solution to homeowners who are in default that banks may not be able to provide.
We can move much faster without these limitations by using private lenders. That allows us to negotiate more profitable deals with our sources while offering a quick and easy solution to homeowners who are in default that banks may not be able to provide.
How can you pay so much?
We always formulate our purchase offers so that our lenders are protected. At the same time, we establish a minimum profit between the time we purchase a note and sell it down the road. We just won’t buy any note unless it makes sense for everyone involved and we will provide the details to show it.
By buying directly from the source, we can avoid paying broker fees and avoid the daisy chains that are sometimes found in note investing.
We also know how to evaluate the full appraised value and avoid paying too much. We can get notes performing again fast to avoid the holding costs. Our team of vendors nationwide will assist us in fixing up or maintaining properties in the event we must take them back.
By buying directly from the source, we can avoid paying broker fees and avoid the daisy chains that are sometimes found in note investing.
We also know how to evaluate the full appraised value and avoid paying too much. We can get notes performing again fast to avoid the holding costs. Our team of vendors nationwide will assist us in fixing up or maintaining properties in the event we must take them back.
Help for homeowners
There are typically a lot of hassles a seller must endure to get their home sold, especially if there is no equity in their home. Many banks are difficult to work with and take time to process a sale, leaving the homeowner in a precarious situation. In contrast, we can offer homeowners the opportunity to avoid all these hassles, since we don’t have the same restrictions or bureaucratic problems of a big bank. As long the homeowner cooperating, we can typically provide them a solution that fits their specific situation.
We offer several great programs and unique opportunities for homeowners who want to stay. We are more flexible and easier to work with than a big bank might be. Our goal is to always keep the homeowner in the home. Depending on the deal, there are government programs available to them to help them pay back their loans. Either way, we can help these homeowners stay in their home, allow them to start building equity for the future and rebuild their credit.
Market conditions
The greatest opportunity to buy and acquire notes is when the market is down or even if it bottoms out. This is because the pool of defaulted mortgages is larger, as well as the discounts available for note investors. We’re prepared to hold the notes we buy for many years if necessary. Since the terms and the interest rates are fixed, we’re not as concerned about near term price fluctuations in home prices as other investors are. Most of our investing plans are determined by the income we expect the note to produce now and in the future. Nevertheless, we buy in strong markets and states with short foreclosure timelines that allow us to dispose of assets quickly if we ever have to take them back.
Rate and term
Due to SEC regulations, we are unable to tell you specific numbers of what interest rates we pay our lenders. In addition, the interest rate we pay relies on a number of factors, including the collateral, borrower, equity, terms of the note, history and paperwork in place. It also depends on your comfort level and the interest rate you are looking to earn. In short, the interest we negotiate with our lenders is on a per deal basis, which will be proportional to the risk and reward that the deal may yield.
In our questionnaire, we ask our investors what their money is doing now. If your money is sitting in the bank, you can put it in a traditional investment such as a CD. You can research nationwide the rates these investments pay by visiting www.bankrate.com. That will tell you what those investments pay and then you can compare them to a deal we offer you so you can make an informed decision. We can tell you that we only pay simple interest on our deals. You’ll always know exactly what interest rate you will be locking in with us prior to making any investment.
In our questionnaire, we ask our investors what their money is doing now. If your money is sitting in the bank, you can put it in a traditional investment such as a CD. You can research nationwide the rates these investments pay by visiting www.bankrate.com. That will tell you what those investments pay and then you can compare them to a deal we offer you so you can make an informed decision. We can tell you that we only pay simple interest on our deals. You’ll always know exactly what interest rate you will be locking in with us prior to making any investment.
Again, every deal is different, however, most of our private loans are setup on a 1 year term and are typically paid off in 7-9 months with non-performing notes. However, it depends on what you want and need and what we want and need. For example, on performing notes we may be able to offer you a 3, 7 or 10 year plan or even longer. Regardless, you’ll always decide what term works for you on any note you invest in.
You are under no obligation to lend on any deal. If you don’t want to go longer than 3 years we can wait for non-performing note opportunity where the term would be shorter.
We always let our investors know that once the Real estate notes are created, the money is being used in the investment and it is tied up. However, should you need the money sooner, we always try to accommodate any private lender whenever we can. There are provisions in our agreements that allow us to pay each other off at any given time. Sometimes we can even do a partial early payoff, so that the lender can get the money to access their needs, allowing the rest of their money to continue to earn the high rates. We ask that you give us advance notice, with a minimum of 60 days, so we can do whatever we can to meet your request. We would attempt to meet such a request by finding another one of our private lenders who’d like to take over your position. Also, should the property be sold or refinanced, you would get your investment back.
Your interest is fixed and locked for as long as the note is out. However, the property may sell or be refinanced before the full term is up. You’ll always earn your note interest until it’s paid in full.
Depending on the deal, you can receive monthly payments of principal and interest, or interest only. Interest only payments keep your entire initial investment working for you each month. However, on some deals, we may ask for deferred payments in exchange for a higher interest rate.
In many cases yes, but it also depends on the deal. With many non-performing notes, your monthly payments are deferred until we can get the note re-performing again. That way we can simplify our bookkeeping and avoid a negative cash flow while working the note.
We currently only offer simple interest on our deals. The reason why is it makes the deal simpler for both parties involved. We will inform you if this ever changes.
Minimum
Though there is no minimum, we typically borrow between at least $10,000 or more when working with our private lenders. If a deal needs more than that then we’ll let you know that as well, but that is usually our range as part of our program.
Guarantee
No. There is no company or personal backed guarantee on these privately held real estate notes. Your main protection and security is the note itself and the property that secures the note. Through our agreements, we set up a conditional assignment where you would be able to take full ownership of the note if there ever were a default. An investor can then use a voluntary or legal process of taking ownership of the collateral or property and then (if desired) sell the property to recapture the money invested plus any costs incurred in doing so.
Approved
The IRS does not approve or endorse investment programs but they do establish guidelines that must be followed in order for you to invest in real estate notes tax deferred or tax free. You may need the services of a custodian to invest retirement funds tax deferred or tax free. For example, U Direct IRA is established and specializes in helping their account holders with real estate investments. We’ll be glad to point you in the right direction so you can get setup correctly.
Loan to value
Usually on non-performing notes, there is little to no equity in the property. However, the note is bought at a large discount which should also be taken into account when analyzing the deal. We will provide you with full details on the value, status and condition of the property whenever we present you with an opportunity to lend to us.
Cost and insurance
Title insurance is already provided as part of the note acquisition since we are not originating the deal. As such, there is no additional cost to you the investor. We will typically work with the original title company should we need to pull title.
Aside from the cost of acquiring the note, there may be other costs involved in getting the note re-performing or if it’s taken back through foreclosure. Costs like this may include paying back taxes, code violations or legal costs. Furthermore, we will factor in a contingency cost for any unforeseen expenses. We will present these details to you as well as to our sources when determining our buy price.
We’ll always keep a valid hazard insurance policy on the property to protect against causalities. The note is listed as a mortgagee and notified if the insurance was ever not kept in full force. Insurance distributions would be used to rebuild or repair the property, or used to pay you off. In some cases, we will need to purchase forced place insurance if the borrower is not paying their insurance. Though this would be an upfront cost, it can be recovered later through the payoff of the note.
Loan positions
No. We do not pool funds. Your funds will fully fund one real estate note secured by a deed of trust on a property with sufficient equity as protection.
It’s a loan secured by real estate that is positioned behind a senior mortgage. In the case of a default, a lender can seize the property through a simple deed transfer or through the legal foreclosure process. Junior lien holders need to payoff or protect any senior lien holders in order to protect their position. Many of the notes we will be investing in are junior liens.
You can either pay them off in full or bring their loan current (making up any back payments if needed) and then making any other payments that come due. This helps to stop or prevent a senior lender from foreclosing, allowing the junior lender to foreclose from their position.
If the senior lien holder foreclosures then junior lien holders could lose their secured position on the property, putting their entire investment at risk. This added exposure to a junior lender is why we would offer a higher interest rate. Many lenders are fine being in junior positions because they get higher interest, are protected by the equity cushion (in terms of the purchase price of the note) and typically will get something from the senior lienholder in a foreclosure. As part of our due diligence, we make sure to minimize the exposure our note has behind a senior lien.
Common concerns
We can’t make any personal guarantees but if we were in a position were we could not keep our agreements, we’d simply transfer ownership of the note to you through our conditional assignment of the note. This means you would step in as the sole lender and have all the legal rights of the note holder. You can then hire an attorney who would advise you if it makes sense to modify the loan or even foreclose to protect or recoup your investment. They would seek to get your investment back, any unpaid interest, collection costs, all your attorney fees and maybe even more.
We’re the property owners and it’s our responsibility to protect our property as well as to protect your collateral. We’d fix it or take care of it and you should never have to get involved in such an incidence. It would only affect you if we were in default and you repossessed the property to protect your interests.
Next steps
Once you are ready to start and have those funds available, we will have you sign a preliminary commitment. This commitment is not legally binding, but alerts us to begin looking for a deal for you. When we select one that meets your goals and investment needs, we’ll give you all the details. At that point, you can decide to pass or play.
It is our policy only to work with people that we have an existing relationship with, like you. You can certainly refer potential lenders to us and we will be happy explain the program and begin to learn more about their investment needs and goals. Once we get to know them more then there is a good chance they can also become one of our private lenders.
You just let us know you are interested, and we will have you sign a preliminary agreement and add you to our distribution list. When a deal comes up, we will present it to you and you can either pass or play. We are confident that once you do your first deal with us, you will want to continue to earn high interest and keep your money working for you on subsequent deals. We are excited to have you join our private lending program!