What Is Private Lending?
A private money loan is a loan given to a real estate investor secured by real estate. Private money investors are given a first or second mortgage that secures their legal interest in the property and secures their investment. When we have isolated a home that is well under market value, we give our private lenders an opportunity to fund the purchase and rehab of the home.
Through that process, the lender can yield extremely high interest rates – 4 or 5 times the rates you can get with other traditional investment plans. It’s a great way to generate cash flow and produce a predictable income stream – all while providing excellent security and safety for your principal investment.
Typical Hold Time: 6 - 12 Months
We find an extremely undervalued property we want to purchase, and once we receive the green light, we borrow the funds from you to purchase and renovate the property. Once we complete property renovations (3-6 months depending on the size of the project), we’ll list and sell the property. When it’s time for closing, you’ll receive your principal, plus accumulated interest. It’s really that simple!
How Does the Process
Work?
Overview of the Private Lending Process
Private Lenders receive information around the property
Attorneys work together to ensure proper documentations are in place
Home is purchased and renovated
Home is sold and lender receives principal + interest
Process is repeated
General Outline of the Business Process
We locate the property that we will purchase and place the property under contract.
We provide the details to our private lenders that may be interested in funding the property. This
includes the purchase price, address, the scope of work needed to make the property marketable,
the post-renovation value, and comparable properties. This allows the lender to fully understand
the value of their investment.
A lender agrees to fund the property. At that point, our attorney ensures all of the appropriate
documents are in order to properly secure and protect the lender’s funds. This ensures that the
lender is protected and their investment is secured through the collateral of the home.
Funds are wired from the lender within 72 hours of closing. Our attorney attorney then funds the
deal and ensures all of the required documents are filed to protect the lender.
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Protecting Your Investment
You, as the private money lender, can benefit greatly from investing your capital. A real estate mortgage or deed of trust provides you with security instruments you would not receive with other investments. You also have added layers of protection because of how discounted we buy, and because you have recourse available to you in case we were to default on the loan.
Greater Returns And Peace of Mind
We currently pay 4-5 times what a typical bank CD (certificate of deposit) is paying. Our rates will fluctuate very little, depending on the purchase price and rehab involved. The lower the price we pay for a home, we can pay a little higher rate to make sure our lenders make it worth their time. Private lending means you can relax while the money is in a truly safe place, working for you.
What’s in it for you?
• Safe investment secured by real estate
• High returns on your money
• A predictable income stream
• No management costs
• No daily headaches with managing contractors
How Do You Benefit from Private Lending?
Objectives
To move people from a vague financial future to one that is defined by clarity, control, and freedom. We will accomplish this by scaling the business to renovate 100 homes per year, providing a reliable stream of revenue for our partners.
Background
Iron Horse Capital Group is a real estate private equity firm and development company, that buys, renovates, holds, and resells single-family residential real estate.
Property Acquisition
Our Company has a unique capacity to acquire off-market properties at deep discounts. Bringing new property deals into the business drives revenue and determines the profitability of the company. Property is located and contracted to purchase through a systematic approach of analyzing data and offer submission. While we do buy on-market properties through realtors, we primarily market directly to sellers through direct mail, networking, internet advertising, etc.
Property Renovation
Once a property is acquired, we use our dedicated general contractors to repair the home. Due to the growth of the business, we focus on partnerships with general contractors, thus limiting the amount of people needed to manage the renovation and simplifying the process.
Funding
Property Disposition
Upon renovation, we utilize multiple avenues to sell the property. During strong real estate markets, we primarily sell our projects on the MLS to end buyers; during weaker markets, we place tenants in the properties and sell properties to investors or private equity firms as a turn-key rental investment. Pursuing both exit strategies at all times ensures we can sell properties regardless of market conditions.
Our business consists of 4 major categories of focus that drive revenue.
The homes we purchase are funded by private lenders. We pay annualized interest to our lenders, who in turn lend us the capital necessary for the purchase and renovation of each property. Lenders are ensured a first or second lien position on the property, providing the lender collateral for their loan. Interested investors must be able to commit a minimum of $50,000 to be considered.
Our Business Strategy
We purchase distressed residential
properties below current market
value. We renovate and sell these
properties for a profit.
75% of the ARV (after repaired value) minus repairs equals our purchase price
Overall Investment Approach
75%
Our overall investment strategy and specialty is to purchase distressed properties at a deep discount. After renovating, we sell these properties to retail homebuyers or investors. The formula we use to determine our purchase price is similar to what many other investors are using.
This can occasionally fluctuate up to 80% depending on the amount of repairs and purchase price, but typically, our homes will have less than 75% LTV (Loan to Value). This allows a margin to pay lenders, attorneys, taxes, and real estate agents, while still achieving profitability. Due to the fact that we usually have at least 25% equity in a home, the private lender has a high level of security, because the lender is always the first person to be paid when a property sells.
- Comparable property analysis to determine the ARV (After Repaired Value)
- Check with the town for permits, violations, or anything else that may cause issues with construction or resell.
- Have a complete walk through with the project manager/general contractor to review the property and to develop a complete scope of work.
- An inspection of the well/septic by a licensed professional.
- An abstract of title produced by an attorney to ensure clean title when buying the property. This is necessary when obtaining title insurance to protect the buyer and lender.
- Hazard insurance policy is placed on the property which protects the buyer and the lender.
We Follow a Strict Due Diligence Process
‘Outperform the Market’ and other phraseology used in this website or by Iron Horse Capital Group shall not be construed as a guarantee of profits in any way, and past performance is not a predictor or indicator of future results. Nothing contained herein in this website shall be construed as a solicitation of securities and only persons who have received a personal private placement memorandum and subscription documents executed by the subscriber and accepted by the Company shall be deemed to have received a solicitation for investment with Iron Horse Capital Group.
Any offerings of Debt or Equity positions are limited to Accredited investors only pursuant to Section 4(a)(2) and/or Rule 506(c) of Regulation D under the Securities Act of 1933. Accredited Investors are generally defined as an individual having a net worth of over 1 million dollars exclusive of primary residence, and certain entities with gross assets of greater than 5 million dollars or made up entirely of accredited individuals. If you are unsure if you or your entity is considered accredited, please verify with your CPA and attorney prior to considering an investment.
All real estate investments carry the risk of a complete loss of invested capital and returns/cash flow/appreciation/distributions after appreciation are not guaranteed and could be lower than anticipated. Please read the entire Private Placement Memorandum (PPM) of any offering for a full discussion of the business plan and risk factors prior to investing.