In today’s economic environment of failing banks, dubious lenders, volatile markets and shrinking 401(k)s, many people are left wondering how they’re going to invest for both short-term and long-term needs. With only so many hours in the day to be in an actual job, an important question on people’s minds is:
“How Can My Money Make Money”?
It’s a legitimate question and it comes down to the power of LEVERAGE. If you can use your money to make money instead of your time or other resources, you’re using the power of LEVERAGE. After all, if your money can make $100 during the same time frame that you make $100 at a job, then you’re just made $200 in the same time period and it didn’t require any more of your time. In essence, your money is another worker just waiting for a job – give it a job! Make money!
Ok that sounds great, you might say. But HOW exactly can I do this? Great question. While there are many ways to invest in today’s economy, we’re going to talk about — you guessed it — real estate. Specifically, Hawaii real estate.
One of the most powerful opportunities to make your money work hard is in Private Lending. How does Private Lending work? It’s actually quite simple:
We locate a property that we can acquire at a minimum 30% off fair market value or more. This gives us a tremendous safety net — an “equity cushion“, if you will. We then give a Private Lender the opportunity to fund the acquisition by funding a third-party escrow account (certified escrow company). The escrow officer records the sale and the Private Lender gets a recorded lien for their investment amount — remember, these properties are worth significantly more than the Lender’s investment because of the upfront equity in each house we purchase. So if we default for any reason (which has never happened), the Lender gets back a property that is worth way more than what they invested.
We then renovate the property and resell it on the open market to an end buyer. If this sounds like flipping houses, then you are correct! Once the property has resold, the Private Lender gets paid.
How much is the return, you may ask? A lot! Typically much more than you’d otherwise get investing in risky and volatile stocks, and you’re getting this fixed rate of return for the duration of each house flip (4 to 6 months). When the property closes to the new end buyer, the Lender gets their initial investment plus all the interest that’s accrued, paid out by escrow. During the course of the project, the Lender also enjoys full title insurance and hazard insurance to further protect their investment.
Once one project is done, we go right into another one to keep the money invested. Of course, the Lender always has the option to choose whether to invest in each property individually. There is no long-term commitment as each house flip stands alone.
So what you have is a PASSIVE way to make your money make money for you — without any work on your part. That’s LEVERAGE. Your money makes money without your direct involvement all with full recorded collateral, equity, insurance and returns known in advance.
If you’re looking a SMARTER, SAFER and MORE PROFITABLE place to invest your funds, then CONTACT ME to learn more about how to take advantage of this little-known wealth generation method.
Michael E. Borger, Owner