Would you like to be able to simply switch one property with a different property on your mortgages or deeds of trust? Who wouldnt? When you buy real estate with private money you can by simply inserting one tiny clause in your private mortgage notes.
This is what the clause should say.
"Borrower reserves the right to substitute like collateral of equal or greater value"
Did you see what just happened? By slipping in one small sentence, you have put yourself in a position to NOT have to obtain new financing every time you sell a piece of property and buy a replacement. This single tiny phrase greatly increases your investing flexibility and leverage.
Imagine you own a three-unit apartment building, and now have a chance to sell it for a hefty profit. Dont worry about paying off the existing note instead, just find a replacement property of equal or greater value and transfer the lenders security interest over to the new property.
Once you finalize the transaction, its important that you file your lenders security against the property with the appropriate government agency, normally your county clerk. Its likely your lender will insist on having either a deed of trust or a mortgage filed in their name.
This clause is a wise idea because of the power and leverage it gives you- another great reason for using private money for real estate investing.
Your investor will be happy to keep his money working, and you will too. When you remember to include a Substitution of Collateral clause in your private money for real estate investing notes, you create a win-win scenario for both of you. Try http://www.private-money-real-estate-investing.com for more info.
Brilliant very brilliant.
There are lots of great reasons to use private money for real estate investing. For more reasons to use private money for real estate investing try http://www.private-money-real-estate-investing.com.