REJVP - Real Estate Joint Venture Partner

Q:         Has the IRS approved your program for retirement accounts?

A:         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. We have been pleased working with Equity Trust Company in Ohio (www.trustetc.com) and there are others like Entrust. We’ll be glad to answer questions about this or help get you setup right.

Q:         Is your investment program insured by the government?

A:         No. There is no government backed guarantee on these privately held real estate notes. Your main protection and security is the amount of equity in the property that secures the note. With enough equity a lender can use a legal or voluntary process of taking ownership of the collateral and then (if desired) sell the property to recapture the money invested plus any costs incurred in doing so.

Q:         What is your minimum investment?

A:         We prefer to borrow at least $50,000 when working with our private lenders. If a deal needs less than that then it may be easier for us to just use our cash reserves.

Q:         Can my interest accrue and grow if I don’t want payments?

A:         In many cases yes, but it depends on the deal. Sometimes we prefer to make monthly interest payments to maintain a protective cushion of equity in the property over time. However, on smaller second mortgages, we may prefer to let the interest accrue if that works for you. That way we can simplify our bookkeeping and at times avoid a negative cash flow.

Q:         Will I receive monthly payments?

A:         In most cases 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.

Q:         What if you pay me off only a month after I invest with you?

A:         We understand that you might be liquidating investments or foregoing another investment program to get our high rates of returns. Therefore we agree in writing, spelled out in your note, that you’ll receive minimum of 3 months interest. So if we needed to pay you off sooner than expected, we would either give you the opportunity to move your mortgage to another property, or pay you off in full including a minimum of 3 months of interest earned.

Q:         Do you guarantee my interest for 10 years if I get into a 10 year note?

A:         Your interest is fixed and locked for as long as the note is out. However we may sell or refinance the property before the full term is up. You’ll always earn your note interest until it’s paid in full. But we do have the right to pay you off early.

Q:         What if I commit to 10 years and then need my money sooner?

A:         Real estate notes are illiquid investments. However, our policy is to pay off (or replace) any private lender who requests an early payoff whenever we can. Sometimes a partial early payoff meets the lenders needs, allowing the rest of their money to continue to earn the high rates. We ask that you give us advance notice, preferable 60 days, so we can do whatever we can to meet your request. We would attempt to meet such a request by refinancing the property, selling the property or, most likely, finding another one of our private lender who’d like to take over your position.

Q:         How long will my investment funds be tied up?

A:         Most of our private loans are setup on a 5 year term. However it depends on what you want and need… and what we want and need. So depending on our plans for the property, we might be able to offer you a 3 year term… or we may ask if you’re willing to commit to a 7 or 10 year plan… if that’s our preference. Regardless, you’ll always decide what term works for you on any note you invest in.

Q:         What determines whether you pay me 8% or 10% interest?

A:         We currently pay 8% on a mortgage in first lien position and 10% on a second or junior lien position.