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Frequently Asked Questions

Funding First Lien Private Money Mortgages

Secured Investment Corp (SIC) and its wholly owned subsidy Cogo Capital, a brick and mortar loan origination center, originate private money loans secured by non-owner occupied residential and commercial properties. All SIC loans are evaluated with asset-based standards as opposed to conventional standards utilized by banks and other institutions. As a private money lender working with SIC, we provide you the opportunity to review our entire due diligence packet on the borrower and the subject property. This allows you to make a fully informed lending decision prior to funding a particular loan.

What Is a Deed of Trust or Mortgage?

A deed of trust or mortgage is a legal document that provides a lender with a lien on real estate. The connotation of "first" position deed of trust or mortgage signifies that the lender's lien on the property has a first priority status, which means the lender has the primary right to collect in the event of foreclosure.

What Is a Private Mortgage?

Private money is capital lent by private citizens or companies throughout the United States. Private Money usually has shorter terms and a clearly defined repayment schedule. Terms will vary from lender to lender and will depend upon the experience level of an investor, as well as the value of the asset securing the loan.

Is Private Money Lending Right for Everyone?

Private money lending is best for individuals who can fund real estate transactions that are not easily liquidated. These individuals have sufficient monthly cash flow to support themselves without needing to access the money used to fund real estate transactions.

What If the Borrower Stop Making Payments?

Ultimately, if the borrower defaults, the lender's remedy is to foreclose on the property. In many circumstances, the lender will be the highest bidder during the foreclosure process and thereby become the legal owner to the property. This is why the beginning equity position is so important. Our underwriting guidelines require a minimum of 35% equity spread in the property at the time the loan is originated. The 35% equity position is based on the "As-Is" value of the property, as verified by an independent appraisal.

Why Are People Funding Transactions Originated by SIC and Its Affiliates?

Healthy Returns with Shorter Terms:

Many investment vehicles, such as stocks and bonds are earning lower than desired, or simply unpredictable, returns. Private money mortgages are a solid source of healthy short-term returns.

Tangible Security:

Unlike investing in stocks and bonds, when you invest in Private money mortgages, you are investing in tangible assets.

Hands Off Investing:

We research, review, assemble and provide you, the lender, with all of the due diligence materials you need to make a fully informed decision regarding funding a specific transaction.

Monthly Cash Flow:

During the course of the loan, the borrower will make monthly interest-only payments to the lender.

Diversification:

Private lending provides an opportunity for individuals to add diversification to their financial portfolio through secured investments in real property.

Less Volatile:

Typically, real estate values fluctuate less dramatically than other investments, providing more stability to the investor.

Other Key Benefits:

You're always in first trust lien position. Loans will not exceed 65% of the asset value. SIC requires "skin in the game" from the borrower (in the form of cash, partner, collateral, and/or equity). Loans are supported by solid exit strategies. It's a passive investment.

How Much Do I Need to Become a Lender?

Secured Investment Corp has a minimum of $15,000, but does not have a maximum on our loan amounts. Our lenders have funded properties that range from $15,000 to over $1,000,000. Our average loan ranges from $75,000 to $85,000.

How is LTV Determined?

We use an appraisal from a certified third party to determine the "As-Is" value of the property.

What If the Property Is Uninhabitable?

When there is extensive rehab that is required to make the property habitable, rehab funds will be escrowed and paid out as the work is completed.

How Are Payments Calculated?

The borrower is required to make monthly interest-only payments with a principle payoff balloon due at the end of the term.

What about Title and Hazard Insurance?

Title Insurance is obtained at the time of closing and is paid by the borrower. One year of hazard insurance is pre-paid by the borrower at closing. If needed, we have a third party forced-placed insurance company that can re-instate hazard insurance for the remainder of the term.

What Happens If the Loan Matures and the Borrower Can't Pay Off?

If the borrower is unable to payoff the loan at the end of the term, the lender can foreclose or extend the loan, or the borrower can deed the property over to the lender in lieu of foreclosure.

Can I Invest with a 401K or a Self-Directed IRA?

Yes, as long as you have a self-directed custodian.

Does SIC Facilitate Lending through Self-Directed IRAs?

Yes. We have worked with many Self-Directed Custodians, and we can provide you with names of custodians with whom we have worked. They can assist you in lending through your Self-Directed IRAs.

What Type of Properties Do You Fund?

We fund single family residences, condos, townhomes, row homes, duplexes, 3-plexes, 4-plexes, and mixed-use commercial buildings.

What States Do You Do Business In?

We can fund properties in CA through Cogo Capital Orange County, Inc. NMLS# 1051306, CA DRE Broker# 01928542. States we lend in

States States States
AL Alabama AK Alaska AZ
Arkansas CA California CO Colorado
CT Conneticut DE Delaware FL Florida
GA Georgia HI Hawaii ID Idaho
IL Illinois IN Indiana IA Iowa
KS Kansas KY Kentucky LA Louisiana
ME Maine MD Maryland MA Massachusetts
MI Michigan MS Mississippi
MO Missouri MT Montana NE Nebraska
NH New Hampshire NJ New Jersey
NM New Mexico NY New York NC North Carolina
ND North Dakota OH Ohio OK Oklahoma
PA Pennsylvania
SC South Carolina
TX Texas
VA Virginia WA Washington WV West Virginia
WI Wisconsin WY Wyoming DC District of Columbia

What Are the Risks Associated with Lending?

Risks include the following: (I) the debt instrument and associated security instrument are not insured by the FDIC or any other governmental agency; (ii) the value of the property is given by an appraiser reflecting his or her opinion of the value at a specific date. There is no assurance that the appraised value will reflect a fair market value, as general and local economic conditions may change; (iii) the Borrower's ability to repay the loan will depend upon the Borrower's financial conditions which could change over time; (iv) there are general risks associated with real estate investments including general or local economic conditions, neighborhood values, interest rates, real estate tax rates, the supply of and demand for properties of the type involved, the ability of the Borrower to obtain necessary alternative financing, governmental rules and acts of nature; (v) default by the Borrower could interrupt Lender's monthly payments. Under extreme cases, it may be necessary to foreclose or take other actions to protect Lender's investment. It is possible for the total amount recovered upon foreclosure to be less than the amount of the total Loan investment, with resulting loss of capital to the Lender; (vi) if Borrower files a reorganization or full insolvency bankruptcy, the foreclosure process could be stalled. Lender could incur significant legal fees and costs in attempting to obtain relief from the automatic freeze on collection proceedings provided by the Bankruptcy Code. Relief consists of obtaining court approval to release the property out of the bankruptcy so that the property can be foreclosed upon. Furthermore, the court could modify the terms of the Loan by extending the due date, changing the interest rate and payment structure, or causing the priority of the Loan to be subordinated to a bankruptcy court-approved financing plan; (vii) the Loan cannot readily be liquidated, transferred or sold; and (viii) challenges to the enforceability of the Loan Documents (including lender liability claims, claims of defective documentation and usury claims).