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Savvy real estate investors understand that to grow an investment portfolio, one needs to leverage their own financial resources, or in effect “use other people’s money” to expand. Savvy investors understand that by using leverage, you maximize the return on your own money, or what is called the return on investment (ROI). People ask me about the type of private mortgage deals we fund and why customers would enter into a private mortgage arrangement over a more traditional bank mortgage. Private lenders lend using a “common sense” approach. There are no restrictions on the amount of money private lenders may be willing to lend. Each application is assessed based on a combination of income, credit and equity, but there are no hard rules with the lending qualification process, unlike a bank. In theory, a private lender may loan up to 100% of the value of a property so the investment by a client may be minimal. Given the minimal investment, any subsequent return on that investment is magnified. Measuring how effective one can be in maximizing their return on investment, becomes simply a math exercise.

Our investor client was seeking a reduction to 10% down on a residential purchase, when 20% down is the banking norm. A private second mortgage was provided. By working the math, the client determined that although a second mortgage would reduce their overall profit, the fact they have less of their own money invested in the property, gave them a greater ROI on that investment. Additionally they could reuse the 10% savings from the down payment and invest those funds into another property. The exit strategy was home appreciation and ultimate refinance of the first and second private mortgage, to a new first mortgage at 80% on the increased value of the home with a traditional lender.

As such, I want to be your “go to guy” for all your mortgage needs but especially your private mortgage needs. If you have been turned down by your bank, it does not mean a mortgage is not possible. Give me a call or drop me an email at and let’s discuss how I can help. I welcome your comments.