Frequently Asked Questions & Downloads
Question: What is private lending?
When we have isolated a property well under market value, we give our private lenders an opportunity to fund the purchase and rehab of the property. Lenders can also earn high interest rates generally 2 or 3 times the rates you can get on bank deposits and other Traditional Investment Plans.
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Question: Who can be a private lender?
Lenders must meet one of the following requirements listed below to be considered for qualifying.
- Family / Friends
- High Net worth Investor or Business associate.
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Question: How is the money used?
On a new property purchase requiring renovations. The cost will be allocated to the purchase price, renovations, carrying costs, cost to lease, and also a small buffer for unexpected expenses.
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Question: Why don’t you get a traditional loan?
There are many reasons, but the primary reason is, time and negotiation leverage. Many of the property we are purchasing are in need of a quick sale within 10-14 days. A traditional bank requires 30-45 days to close a loan. Also, our leverage is far greater when we purchase using cash funds. Many traditional home sales fall out of contract because of financing issues, and this allows us to negotiate a much lower purchase price and reduce our risk.
Lending guidelines are also continually changing. New requirements include applications, approvals, junk fees, and strict investor guidelines. They also limit the number of investment properties that can be purchased by one company.
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Question: How can you afford to pay such high returns?
We make our money on the purchase. We may pay very high returns, but it allows us to purchase 20-30% below a retail purchaser. That instantly creates thousands of shillings in equity. Also which is far more important is the fact that our focus is on the cash flow from the property which allows as to be able to pay such high rates. We never buy negative cash flow properties because then we won’t have cash to pay the interest payments to our lenders. Also, typically we cut out the middleman in transactions, such as: commissions, mortgage broker fees, loan fees and our attorney costs are lower because there is less work for them to review.
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Question: Are you really helping sellers?
Absolutely. With your cash funding we can offer something very few buyers can. We are buying on their timeline in as little as 10-14 days. Knowing that we’re going to renovate the property and buying in as-Is condition is a very important factor to most sellers of distressed property. They also won’t have to pay any additional fees.
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Question: What if the market gets worse and values go down?
This is a great question and valid concern. Our goal is to purchase quickly and hold for the long run. The market doesn’t tend to shift that dramatically in a matter of months - it’s typically a longer process for an area to decline. Remember, we’re buying in strategic areas where inventory is already low and demand is high this greater minimizes our risk.
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Question: What interest rate do you typically pay your private lenders?
We currently pay 2-3 times what a typical bank deposit is paying. Our rates will fluctuate very little all depending on the purchase price and rehab involved. Most of our lenders are paid from 10%. The lower the purchase price, we can sometimes afford to pay a little higher rate to make sure our lenders make it worth their time.
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Question: How long will my funds be held?
The majority of our loans are set up on a 12-24 months note, but it basically depends on you since our focus here is a long term partnership.
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Question: What if I want a short-term note after only 3 months?
It’s extremely important to us that we do not waste your time. A short term note can be very tricky because for us our strategy is more long term. We do this because of the idea of cash flow and in a way you as the lender you became an investor indirectly and generate passive income through the interest payments.
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Question: When will I receive payments?
From the date of closing a grace period of one month is provided before we start making your payment whether the property has been leased or not. Kindly note that it’s our duty to make sure that the property starts to cash flow immediately from purchase. For the principle payment at the end of the note and you wish not to renew the note you will be required to give us a written notice of 60 days before the end of the note so that we can arrange for a lump sum payment.
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Question: Is there a Guarantee on your investment?
No. There is no government backed guarantee on these privately held real estate notes. You’re deriving protection from the equity in the real estate. If at any time we were to default on the note, you have legal right to take the property (essentially foreclose on us). Many investors laugh about this one and say, “I hope you’re a day behind on payments I’d gladly take this one off your hands”. You have to remember we plan for the worst, and our properties have thousands of shillings of equity in them; and worst case scenario, often times is we don’t make “as much” as we hoped for. But as a sign of commitment to you as the lenders our directors are willing to sign personal guarantee for you.
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Question: Who buys Insurance?
We do. We pay for a title search and also a title policy on the property but the Hazard Insurance Policy we mentioned above, just as we would in a typical transaction.
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Question: What kind of insurance policy do you get on the property?
If we purchase a renovation, we purchase a builders risk policy (Vacant Dwelling Policy). In case of any damage, insurance distributions would be used to rebuild or repair the property, or used to pay you off.
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Question: How much is it going to cost me to lend to you?
It is our policy to pay for all the closing costs so that your entire investment goes to work for you. We will pay for the closing agent, document preparation fees, overnight mail fees, bank wire fees and recording costs. We do not charge any fees or commissions to our private lenders.
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Question: Will my money be pooled with other investors?
No, we do not pool funds. Your funding will be tied to one piece of property secured by a deed of trust. But it will depend on the size of the project and all the information will be presented to you before fund are pooled with those of other lenders for a particular project for your approval.
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Question: If you default on the LOAN, HOW do I acquire the property?
In this unlikely scenario, we would simply transfer ownership of the property to you, if possible. If for any reason we did not (or could not), then you have all the legal rights of a secured lender. The best way to legally protect your interest in case of a default would be to hire an attorney. They normally would seek to get your investment back, any unpaid interest, any collection costs, all your attorney fees and maybe even more. A legal representative could advise you if it makes sense to foreclose or seek ownership of the property to protect or recoup your investment.
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Question: How does the process work to sell my property?
We buy properties in any condition, in any area, in any price range, in any situation. We will buy you property as is you don’t need to do any repairs. Our vision is to revitalize communities customize properties from ground up so condition does not matter to us.
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Question: What do you mean by “any condition, area, price range or situation?
Whether you property is in foreclosure, over-leveraged, condemned, with liens or health department violation, not maintained, fire damaged, or about to fall down, we will buy it.
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Question: What will your service cost me?
Nothing! We do not charge you any fees to discuss your situation, make you an offer or to buy your property.
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Question: Are you a real estate agent?
Corasset Investments Ltd is a real estate investment company we invest in real estate, but work closely with real estate agents to find fair market value for properties. Our primary focus as investors is to come up with an amicable solution to your situation and buy and restore your property.
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