What exactly is a private equity loan?
A private equity loan is a loan for cash, secured by a deed of trust. Typically, borrowers seek private equity loans because they are unable to obtain conventional financing, or because their loan requirement is needed more quickly than a bank is able to provide. Private equity loans are backed by equity in the property and secured by a deed of trust and/or other collateral.
What if the borrower does not pay or defaults?
Borrowers are held to a the payment timeframe stated in their promissory note. If a borrower is 10 days late, the borrower will receive a late payment notice. If a borrower is 31 days late, a notice of default (NOD) will be issued and filed at the County Recorder’s Office. This action initiates the foreclosure process. If the borrower does not cure the default, the property will be sold and the investor's loan principal plus penalties and late charges are paid directly to the investor out of the sale proceeds.
How often are dividends received and who is responsible for collection of payments?
Dividends are paid monthly. Savvy Real Estate Capital provides loan servicing, which includes: collection and disbursement of interest payments; loan administration and documentation; notices to borrowers; and communication with note investors. You can request your monthly payments to be mailed or they can be directly deposited to your bank account.
Who services the loan and what is the fee charged to investors?
Savvy Real Estate Capital provides loan servicing because it allows us to actively monitor a borrower and loan. Our servicing fee varies from 1% to 1.5% of the loan principal amount per annum depending on the loan amount, the number of note investors, and type of loan. The servicing fee is payable on a monthly basis upon receipt of interest payment from a borrower.
What is the minimum investment?
$100,000
Can I invest using a retirement account, such as, an IRA, SEP IRA, Profit Sharing Plan, or 401k?
Yes. All retirement accounts are eligible when the investor establishes a real estate IRA as custodian. Please contact IRA Services for specific retirement account compliance details.
Can title to a note be held in the name of a trust, partnership or other business entity?
Yes. A note can be held in the name of any legal entity.
What is a fractional note?
A fractional note is a note with multiple investors who provided principal toward the loan amount.
What is an accredited investor?
An accredited investor is one who has either a million dollar net worth or greater and/or has had income of more than $200,000 for the last two consecutive years. For more detail on the qualifications of an accredited investor download our questionnaire from the Forms page.
What is the typical loan term?
6 to 24 months