Frequently Asked Questions
Click on a question to read the response.
How does private lending work?
You loan the money to purchase a specific piece of property in Central New Jersey and become a mortgage holder. This means that, just as with a bank, you have a lien against the property and it cannot be sold or refinanced without you getting paid. The mortgage is recorded with the county where the property is located. Alternatively, you may loan money against a property we already own, so that we have cash on hand to jump on last-minute deals we often find. This is the best way for us to find great deals, thus putting your money to the best use.
Do you have a closing?
Yes. We close all of our properties with a licensed attorney or title company.
Do you have insurance on the property?
Yes. We have fire and liability insurance with the investor (you) named as the insured.
What kind of property do you buy?
We primarily buy distressed properties. This means foreclosures, estate sales, and fixer-uppers -- which we then rehab. We have found that this is the best way to buy undervalued property.
How much should I invest?
Only you know your financial situation. We borrow up to 70% of the value of a property. We have bought properties for as liitle as $10,000 -- so we can put almsot any amount to work for you. You can loan much more than that, although if it exceeds $200,000, it may be secured against more than one property, depending on the value of the houses, to almost ensure that your loan does not exceed the 70% LTV (loan to value).
Can I use my home equity line of credit to invest with you?
Yes. We have several clients who borrow money from their line of credit at 2-3% and invest with us to
earn 7% or more. They keep the difference. It's like free money.
How can you afford to pay 7%?
We know how to find great deals. We use your money to buy rental properties that cash flow at a profit. For example, if you loan us $100,000, the return you earn monthly will be $583.33. We would use that money to buy a property we can rent for $1,200 or more a month or buy a house to "fix & flip" that would be rehabbed and sold for market value.
Why shouldn't I just buy a property like this myself with my money?
You should! If you know how to find deals like this, rehab the property, find tenants, and manage the rental, you can make more than 7%. But it is labor-intensive, as any landlord knows. Our company gives you the opportunity to make a great return without plunging toilets or getting your hands dirty.
How long is an investment with Letter Perfect Homes?
We write all our loans for a one-year term. If we are placing a loan on a "flip" property that we intend to resell, your investment is returned when the house sells, typically in 6-8 months. If the loan is on a rental, it is a one-year loan, renewable on an annual basis.
Is it possible to use my retirement account to invest in real estate?
Yes. You can invest your retirement money in almost anything you like --stocks, bonds, gold, oil, collectables, or a private loan with Letter Perfect Homes -- by setting up a self-directed IRA and rolling over all or a portion of your funds. Any returns you earn on an investment with us is tax-deferred in a traditional IRA, and completely tax-free in a Roth IRA.
Who do I contact with a question about your service?
Call our office at 908-279-3300.
Send an email to info@LetterPerfectHomes.com.
Submit a request via our contact form.