Structured Properly, Privately Held Mortgages Offer 10% to 15% Tax-Free Returns with Low Risk

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Buyers of privately held mortgage notes have long been achieving 10% to 15% returns. However, for most people, investing in privately held mortgages is not easy. Finding good quality, low risk notes is a challenge, collecting payments is a hassle; and the worry of home-owner defaults have made this form of investment unattractive for normal investors. Now each one of these issues have been addressed with a new private mortgage investment strategy created by Mortgage Buyers Inc. Funds from an existing individual IRA or a profit sharing plan may be used to invest to generate tax-free income.

Buyers of privately held mortgage notes have long been achieving 10% to 15% returns. However, for most people, investing in privately held mortgages is not easy. Finding good quality, low risk notes is a challenge, collecting payments is a hassle; and the worry of home-owner defaults have made this form of investment unattractive for normal investors. Now each one of these issues have been addressed with a new private mortgage investment strategy created by Mortgage Buyers Inc. Funds from an existing individual IRA or a profit sharing plan may be used to invest to generate tax-free returns.

With the downturn in the economy and 50% loss in stock portfolios retirement plans are in jeopardy, investing in privately held mortgages offers an alternative to the stock market.

"Earning 10% to 15% tax free by buying a privately held mortgage in a Self Directed IRA without the normal risks and complications is possible.", says Jerry D. Remien, MBA, CMI and CEO of Mortgage Buyers, Inc http://www.mortgagebuyers1.com, "Buying a low risk mortgage note is one of the keys. By using a turn-key process, our clients are earning above average returns while keeping safety of principal and returns as the program's primary goal. Setting up your self-directed IRA and collecting payments are taken care of with one low annual fee. Profits can quickly be reinvested in a mutual fund of your choosing. With low leverage notes, the mortgage retains its value and property can be easily sold for full recovery of your investment should the need arise."

What is the risk in buying privately held mortgages? What happens if the mortgage goes into default and they stop making the payments?

As with any investment, there are risks. Here is how the risks are minimized while maximizing your return.

  • Keep the investment-to-value at or below 50% of the current property value
  • Evaluate the buyer's down payment at the time of the sale. Having "skin in the game" is a show of commitment to making the mortgage payments and pride of ownership
  • Review the payor's record of financial responsibility by running a credit check on the individual(s), which provides a quantitative analysis of how they perform on their financial obligations
  • Order a current appraisal of the property to verify its current value
  • Order a lender's title insurance policy from the local title company to be certain that the mortgage lien is in first position in the event of default. This insures that you will be in a first lien position should default occur
  • Purchase payments at a discount to insure the required rate of return

By following the model above the risk of losing the principal by default is remote. If the property is sold at foreclosure for more than 50% of its appraised value the entire principal would be recouped. To simplify the process, a foreclosure service handles the foreclosure from start to finish. The fees for this service are added to the principal balance due and therefore recouped, in most cases, when the foreclosure sale is finalized.

To learn more about privately held mortgages and how to structure them properly call Jerry Remien at Mortgage Buyers, Inc. 800.949.0888 or visit http://www.mortgagebuyers1.com.

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