Invest Small—Earn Big
Our loans require a much smaller investment than most mortgage lending investments available, yet still offer a generous rate of return. This makes it easier for:
- Small investors to participate, and
- Medium and large investors to diversify.
Mortgage & Note Already Done
You don’t have to do any of the initial red tape that goes with mortgage lending. You simply lend against our income stream with note-on-note investing but still get the same security as if you were the original lender.
Loan Payments Tied to Paydays
The borrowers’ loan payments come out of their bank accounts the same day their income payments are automatically deposited. At some banks, this happens within microseconds.
This makes it much easier for the borrowers to stay current on their home loans.
Low Loan Payments
Compared to most households, the borrowers have very low loan payments. To live anywhere else would cost them significantly more.
This gives the borrowers a huge incentive to stay current on their loans. The low LTV also gives them another huge incentive.
No Grace Period
With automatic electronic payments, any late payment takes human attention. So, if a payment is even one day late, you get to collect a late charge. You also earn daily interest on the unpaid balance.
Late charges are tied to the statutory late charges for bounced checks. For these loans, that’s usually $30-40 per late payment.
No Partial Prepayments
Partial prepayments cause extra bookkeeping and, on most home loans, have no minimum. They can even be as little as $.01. To avoid this, the borrowers’ prepayment terms are simple—all or nothing. The borrowers would have to sell or refinance to pay you in full, neither of which is likely.
Note-on-Note Is Better
See the advantages of note-on-note financing over note buying.
No Property Insurance
Most of the properties in this program don’t have property insurance, and the insurance requirement is excluded from the mortgage. Why? Either the properties wouldn’t qualify or the cost is prohibitive.
Offsets
Several things offset this:
- You get a higher interest rate,
- The casualty risk is low, and
- Even in a total disaster, you can expect the land value alone to cover the unpaid balance.
Enhanced Interest Rate
Because of the insurance waiver, you get a premium interest rate.
Fire Risk Is Low
Home fires are terrible but, fortunately, infrequent. Statistics count all fires and total loses. The statistic for all fires includes even those as minor as small stove top fires.
Here are the Florida home fire stats for 2024, a typical year:
| Ratio | Percentage | |
|---|---|---|
| All Fires | 1:400 | 0.25% |
| Total Destruction | 1:3000 | 0.0333% |
Hurricane Risk Is Lower
Hurricanes and their aftermath make big headline news. However, the:
- Destruction is mostly isolated, and
- Total destruction numbers are half that of fires.
Here are the average annual Florida stats for the past 10 years for hurricane related damages to homes:
| Ratio | Percentage | |
|---|---|---|
| Any Damage | 1:150 | 0.67% |
| Total Destruction | 1:6000 | 0.0166% |
We’re also spread geographically, serving all 67 counties in Florida, so the risks are diversified.
Land Value Alone Is Enough
Let’s take the worst case scenario for a property, where a casualty destroys everything above ground, which, as the statistics show, rarely happens. The land still survives.
Because of the low LTV, even after total destruction we can still expect the land value to cover the balance due on the loan.
This wouldn’t work on higher LTV loans, but, at our LTV levels, it does. Properties are specifically screened with this in mind. We also screen for flood zones and sinkholes.
Extended Cure Time
Most home loans give the borrowers 30 days to cure any default. The notes from the borrowers have that provision, but the note-on-note agreement with you gives the trust 90 days to cure. Why? So the trustees can either get things resolved with the borrowers or begin foreclosure proceedings.
Meanwhile the trust is obligated to step in and keep the payments current.
Trustee Support
In addition to getting the income stream from the borrower, you get, from the trust, at no extra charge, the:
- Enforcement of:
- Loan payments,
- Property tax payments, and
- Property Maintenance; and
- Obligation to step in and pay if the borrower fails to do so.