Private Money Partnership Guide

 

Disclaimer: 

This is not an offer to sell securities. Any person, entity, or organization must first be qualified by the company and read all of the offering documents and attest to reading and fully understanding such documents. TLC Estate and it's affiliates are not licensed securities dealers or brokers and as such, do not hold themselves to be. This presentation should be construed as informational and not as an advertisement soliciting for any particular purpose. All securities herein discussed have not been registered or approved by any securities regulatory agency in accordance with the securities act of 1933 or any state securities laws.

Agenda:

  • Benefits of Private Mortgage Lending

  • Company Overview

  • Property Buying Criteria

  • Construction Management System

  • Investment Terms & Conditions

  • Sources of Funding for PML

  • Case Study

  • Common Questions

  • Next Steps

Benefits of Private Mortgage Lending

  • Passive Investment

  • High rates of return on your money at 9-12%

  • Leverage our experience and market knowledge

  • Investment is secured by the real estate itself

  • Tangible investment

  • No management fees

  • Creates predictable monthly passive income

  • Short term loans

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Benefits of Private Mortgage Lending  -  Compounded

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Company Overview

TLC Estate LLC is a professional, full service real estate solutions firm that buys and sells properties
throughout Eastern North Carolina area . We specialize in buying distressed homes at a significant discount,
and renovate , then resell them to retail home buyers and landlords. TLC Estate is excited to be part of the
area’s renaissance and we aspire to continue contributing to the economic rejuvenation of Durham Raleigh
area and its neighborhoods.
Since its
inception, TLC Estate has passionately pursued the goal to help to as many people in our community
as possible to find an answer to their real estate needs. Through all these years, we ’ve developed a solid
foundation of real estate knowledge, with the integrity to follow up on promises and make successful deals
happen.

Facts about TLC Estate

•    A full service real estate solutions company in North Carolina, specializing in buying  and selling residential properties.

Our Mission Statement

At TLC Estate, it’s our goal to not only have a positive effect on ourselves and our families - but also to inspire, motivate and create lasting change in everyone we encounter. We will treat our clients and team members with respect at all times.

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“We’re highly motivated, knowledgeable, ethical, and qualified to handle any real estate transaction.


We are committed to helping people with their real estate needs and making successful deals happen“.

Company Business Model

Our overall investment strategy and specialty is to purchase distressed properties at a deep discount usually 3 5 % to 50% below market value and renovate and sell those properties to retail homebuyers and landlords.

At TLC Estate our focus is on providing SOLUTIONS for our clients and finding VALUE for our investors by
locating  abandoned and ugly, distressed or vacant homes that are eye sores and we put them back into use after renovation

 

Our core business lies within our systems, education and knowledge of the real estate industry. We did not just buy a “Real Estate investing for off the Internet and become a real estate investor overnight. We
have spent thousands of dollars to learn how to be successful in this business and do it the right way the first time. Through our affiliation, we are connected with a national network of investors and redevelopers that provide continual support and weekly trainings on changes throughout our industry.

 

This process has allowed us to circumvent many pitfalls most novice investors would make. Learning the hard way is not a phrase in our vocabulary, and we certainly would not ask anyone to invest with us if we weren’t confident enough to invest ourselves!

We Follow A Strict Due Diligence Process
We have a systematic and disciplined approach when purchasing investment properties, putting each
potential investment through a strict due diligence process. This rigorous set of criteria includes, but is
not limited to, the following:

• Comparable property analysis and examination by a certified, independent appraiser
• An economic study of the neighborhood, city planning and development
• Demographics of area, marketability, and growth potential
• Statistics on the crime rate
• Public transportation and schools
• Overall condition of the property, including heating and air, plumbing, electrical, roof and structural condition

WHAT’S OUR COMPETITIVE ADVANTAGE?


Our company can acquire great deals on properties because we have an ability to act quickly and can close
with CASH on the seller’s timeline. Th at is why we can buy properties at such a discount. Obtaining loans
through private money lenders gives us this competitive advantage over other investors who sometimes take weeks to go through the time consuming bank approval process in order to purchase properties.

 

We also employ marketing strategies as soon as we purchase a home giving us a fair advantage over a realtor.
Typically, most realtors don’t spend time or money on marketing or lead generation strategies. As a result,
it can sometimes take months to attract potential buyers. Often times , we able to find our own buyers allowing us to secure a strong sales price and save on sales commissions.

 

Investing with us also provides a win-win for the homeowner as well. With your cash funding, we can offer
homeowners something that very few buyers can. We are helping sellers by purchasing their homes in their
timeline in as little as 7 -14 days. Knowing that we’re going to renovate the home and we are buying in as is
condition is a very important factor to sellers who live in older, outdated homes, or those needing repairs.


These sellers will also not be required to pay any attorney fees, closing costs, home warranties, inspection fees, realtor commissions, etc. We are not the perfect fit for everyone; but for the seller with the right motivation, these features are a necessity.

TLC ESTATE VS. TRADITIONAL BUYER
 

Here are just a few benefits sellers have of working with T LC Estate to sell a home:


• CASH OFFER
• NO COMMISSION
• QUICK CLOSE
• NO FEES
• PAY NO CLOSING COSTS
• WE BUY THE HOUSE AS IS
• NO APPRAISAL
• NO LENDING RESTRICTIONS

 

Most homeowners have no idea what options are available to them beyond listing a house with a Realtor or trying to sell the house on their own and just hoping for the best. We provide a unique alternative to listing their house on their own or with a Realtor.

When we work directly with a home seller, what we provide can not only make for a smooth transaction, but
it can also add up to thousands upon thousands of dollars in savings as compared to selling a home through traditional means.

Property Buying Criteria -- Target Market

  • We target single family and multi-family properties throughout Johnston, Wake and Wayne counties

  • We look for properties we can add significant value to

  • Our goal is to acquire properties 30% to 50% below market value

Property Buying Criteria -- Finding Opportunities: 

  • Direct response marketing for motivated sellers

  • Real estate agents

  • Referrals from other investors

Property Buying Criteria -- Our Advantage

  • Market knowledge

  • Underwriting and due-diligence

  • Speed and ability to close with cash

  • Operational systems

Construction Management System

  • Construction  Knowledge

  • Repair Estimate System

  • System for Creating a Scope of Work

  • System for Finding Great Contractors

  • Process for Getting Bids

  • Learn What Legal Documents You Need to Protect Yourself

  • System for Construction Management

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Construction Management System - Legal Documents:

  • Independent Contractor Agreement

  • Indemnification Insurance Agreement

  • Payment Schedule

  • Contractor Lien Waiver

  • Scope of Work

  • W-9 Tax Form

Documents Securing Your Investment

  • Promissory Note  (Promissory notes legally bind the borrower and lender in an agreement where the borrower is responsible for paying back a loan or debt. They lay out the conditions of the loan and detail the time frame for paying back the loan as well as any interest that might accrue over the life of the loan)

  • Mortgage or Trust Deed ( A Deed of Trust is an agreement between a home buyer and a lender at the closing of a property.  It states that the home buyer will repay the loan and that the mortgage lender will hold the legal title to the property until the loan is fully paid. A deed of trust is a type of secured real estate transaction that some states use instead of mortgages. )

  • Hazard Insurance Policy 

Sources of Funding for PML

Cash
Cash held in most types of bank accounts can be accessed quickly and can fund your deals in minutes, instead of hours or days. Fees are generally minimal for wire transfers and cashier’s checks.


 

Home Equity Line of Credit

A home equity line of credit is a very powerful source of funding that many people have and don’t even think of. Unleveraged equity is dead money and it’s not making any interest. You can easily tap into that money. It’s a way to make sure you’re in first position when we’re ready to pull the trigger and buy a property.
 

Personal & Business Lines of Credit

Personal loans and “signature lines of credit” can be obtained from most banks or credit unions by anyone with good credit and a stable income.


 

Retirement Accounts

More and more private money lenders are using their IRA funds to invest in real estate. A self directed IRA is essentially the same as a traditional IRA, but allows you to purchase a broader range of investments, including real estate.

Liquidated Securities & Investments

Investments are a way to put your savings to work earning more money. However, if your stocks and
investments have not performed as you had expected, it might be time to consider other investments. As you know, stocks can be liquidated as and when you wish. Sometimes you need to liquidate your investments because you need the money for something you want to purchase such as real estate.

Investing With a Self Directed IRA Account

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Retirement Accounts That Can Be Self Directed

  • Roth IRA’s
  • Traditional IRA’s
  • SEP IRA’s
  • 401k
  • SIMPLE IRA’s
  • 401k (qualified plan)
  • Educational Savings Accounts

Health Savings Accounts

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Most people think that an IRA can only be used to purchase investments, like stocks and mutual funds. But that’s not true! You can get private mortgage loans using the funds which are already in your IRA’S and other retirement plans.


As it pertains to lending for real estate investments, enter the Self Directed IRA. The IRS has set forth guidelines on what you can and cannot invest in with your IRA. Many people are surprised at the scope of options available. From tax liens, gold, real estate investments and real estate notes, IRA’s are much more powerful than most people ever realized. If you add to that power of a Roth IRA which allows you to enjoy your earnings tax free or deferred, and you’ve got a fast road to an easy retirement!
 

However, in order for you to use retirement accounts for loans, they must first be administered by a third
party custodian. After selecting your custodian, you simply send a transfer form to them and they’ll do all the work for you, once you’ve done that you are ready to make private mortgage loans

Case Study

Case Study - 907 Price Ave, Durham NC

Type of property - Duplex

Each Unit - 1 bed / 1 bath, 660 SQ FT

1 Unit is vacant, 2 unit rented - $640/ month

Exit strategy: Convert duplex into a Single family house

Scope of work:

Reframe the entire dwelling structure

Add a half bathroom and one bedroom

Replace roof

Replace electric, HVAC, plumbing

Install brand new kitchen 

Install brand new bathrooms

Single Family House 3 beds / 2 bath, 1,320 SQ FT

Time period from acquiring this property to the final selling: 4 months

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BEFORE

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AFTER

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BEFORE

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AFTER

Investment Terms & Conditions

Minimum Investment:
When working with private lenders, $100,000 is our minimum standard investment. When first investing with
us, a lower initial investment amount may be agreed upon to ensure you’re confident when working with our company.

 

Mortgage Terms
The majority of our loans are set up on an 8-12 month note however, it depends on the size of the project
If we are doing a teardown and rebuild, we will have to wait on the county inspectors for many approvals
thus causing delays We account for all of those details upfront and will give you estimated time frame for
the return on your investment.  Also, we do not pool funds -- your funding will be tied to one piece of property secured by a deed of trust. 

 

Payment Schedule:
Typically, we pay one large lump sum at closing on a short term note. This is much easier to manage for both of us, especially if we’re working out of a retirement account. On a longer note, we will pay monthly just like a typical mortgage.

Investment
Terms Conditions


•  Minimum Investment --$100,000
•  Interest Rate 6 - 10 % on average
•  Payment Schedule paid monthly on the 1st of the month or a lump sum at the closing
•  Mortgage Terms 12 months (projects usually completed in 3 to 6 months)
•  Return of Principal and Interest paid back at closing
•  1st or 2nd Lien position
•  Option to renew
•  All documents recorded

1st or 2nd Lien Position:
The Investor, as “mortgagor,” has the right of first lien holder and Power of Sale on the property. The 1st lien position is placed behind a senior mortgage. You are probably used to hearing the term first and second mortgage.

The second mortgage is a junior lien because it’s in 2nd position. The senior lien or first mortgage
must be paid prior to the 2nd lien.

Common Questions

WHAT IS PRIVATE LENDING?
When we have isolated a home well under market value, we give our private lenders an opportunity to fund the purchase and rehab of the home. Lenders can also earn high interest rates generally 4 or 5 times the rates you can get on bank CDs and other Traditional Investment Plans.
 

 

HOW IS THE MONEY USED?
On a new home purchase requiring renovations. The cost will be allocated to the purchase price, renovations, carrying costs, cost to resell, and also a small buffer for unexpected expenses.
 

 

WHY DON’T YOU GET A TRADITIONAL LOAN?
There are many reasons, but the primary reason is, time and negotiation leverage. Many of the homes we are purchasing are in need of a quick sale within 10-14 days. A traditional bank requires 45 days to close a loan. Also, our leverage is far greater when we purchase using cash funds. Many traditional home sales fall out of contract because of financing issues, and this allows us to negotiate a much lower purchase price and reduce our risk. Lending guidelines are also continually changing. New requirements include applications, approvals, junk fees, and strict investor guidelines. They also limit the number of investment properties that can be purchased by one company.

HOW CAN YOU AFFORD TO PAY SUCH HIGH RETURNS?
We make our money on the purchase. We may pay very high returns, but it allows us purchase 20-30%
below a retail purchaser. That instantly creates thousands of dollars in equity. Also, typically we cut out the
middleman in transactions, such as: commissions, mortgage broker fees, loan fees; and our attorney costs are lower because there is less work for them to review.

ARE YOU REALLY HELPING SELLERS?
Absolutely.
With your cash funding we can offer something very few buyers can. We are buying on their
timeline in as little as 7 14 days. Knowing that we’re going to renovate the home and buying in as Is
condition is a very important factor to most sellers of distressed property. They also won’t have to pay any
additional fees.

WHAT IF THE MARKET GETS WORSE AND VALUES GO DOWN?
This is a great question and valid concern. However, our strategy is not to speculate 3 years down the road. Our goal is to purchase quickly and sell even faster. Most of our projects are complete in 1-2 months and will be sold in 4-5 months. The market doesn’t tend to shift that dramatically in a matter of months it’s typically a longer process for an area to decline. Remember, we’re buying in strategic areas where inventory is already low and demand is high; this greater minimizes our risk.

 

WHAT INTEREST RATE DO YOU TYPICALLY PAY YOUR PRIVATE LENDERS?
We currently pay 4 5 times what a typical bank CD is paying. Our rates will fluctuate very little all depending on the purchase price and rehab involved. Most of our lenders are paid from 7.75 -1 0 %. The lower the purchase price, we can sometimes afford to pay a little higher rate to make sure our lenders make it worth their time.

HOW LONG WILL MY FUNDS BE HELD?
The majority of our loans are set up on an 8-12 month note, but it depends on the size of the project. If we are doing a teardown and rebuild, we will have to wait on the county inspectors for approvals . This will cause delays. But, we account for all of those details upfront and will give you estimated time frame for the return on your investment.

WHEN WILL I RECEIVE PAYMENTS?
Typically, we pay one large lump sum at closing on a short term note. This is much easier to manage for both of us, especially if we’re working out of a retirement account. On a longer note, we will pay monthly, just like a typical mortgage.

IS THE IRS APPROVED TO USE RETIREMENT ACCOUNTS IN THIS MANNER?
Yes, these are established tax guidelines, and it is completely legal. However, we always recommend the
services of a custodian to invest retirement funds tax deferred or tax free.

WHO BUYS INSURANCE?
We do. We pay for a title search and also a title policy on the home, just as we would in a typical transaction.

WHAT KIND OF INSURANCE POLICY DO YOU GET ON THE HOME?
If we purchase a renovation, we purchase a builders risk policy (Vacant Dwelling Policy). In case of any damage, insurance distributions would be used to rebuild or repair the property, or used to pay you off.

HOW MUCH IS IT GOING TO COST ME TO LEND TO YOU?
It is our policy to pay for all the closing costs so that your entire investment goes to work for you. We will
pay for the closing agent, document preparation fees, notary fees, overnight mail fees, bank wire fees and
recording costs. We do not charge any fees or commissions to our private lenders.

Next Steps

GETTING STARTED WITH US
If we haven’t already, it’s important to sit down and discuss all these details in person. We will need a clear definition of what your goals are, i.e. long term investment or short term, and the amount you are comfortable initially investing. At that point, we will present you with any current opportunities that fit that criteria or contact you as soon as we have one that fits.

 

If you have any interest in this opportunity, please contact our office by phone

at 919 608 6579 or 347 931 1866 (Eve)
contact@raleighwebuyhomes.com

REFERRAL PROGRAM
Word of mouth is typically how we are able to work with private lenders like you. It would be greatly
appreciated if you passed our information on to anyone that may be interested in the opportunity to be a
lender. In our business, it’s always important that we have a steady stream of lenders. Once you’ve done a few deals with us and you’ve learned how we’re purchasing so low, you may attempt to do it on your own. If that’s your goal, we’re happy to help you any way we can.