How Your Money Grows
Every private lender is looking to maximize the return on their investment dollars. They want their money to grow. But their reason for doing so can be different. Perhaps you want to grow capital to open a future business, pay your child’s education, pay off debt or build wealth to secure your future retirement. There’s different ways to invest your money to reach your dreams and goals, and private mortgage notes is one of them. However, mortgage note investing is not for everyone, but we can help guide you to see if it’s right for you.
You can control your investments and safely make them grow at three to five times your current rate. What we are going to share with you on private mortgage investing is very common in realmm estate circles and has been going on right under your nose in every city in America.
Do you know what $50,000 is worth in one year compounded at a 5% yield? It’s worth $54,965. But now let’s take that same $50,000 and invest it for the same five years at 12% simple interest instead of 5% compounded. Now it’s grown to an amazing $ 56,000! That’s a $1035.00 Difference simply by upping the yield from 5% to 12% ……
Take a look at the following chart…
| Amount | 5% Compounded | 10% Simple | Net Increase |
| $50,000 | $63,814 | 75,000 | 11,186 |
| $75,000 | $95,721 | 112,500 | 16,779 |
| 100,000 | $127,628 | 150,000 | 22,372 |
| 150,000 | $191,442 | 225,000 | 33,558 |
| Most of the direct lending we do to borrower’s are between a 6 months to 1 year length. However, we used 5 years as an example above because many private lenders keep a long term relationship with us and continue to reinvest their money with AryMing Asset Funding. | |||
These numbers are huge when you consider that in the above example the interest earned on the 5% investment could be invested to begin earning 10% too!
If you expand it to a ten year term, your $50,000 would be worth $16,288.95 at 5% compounded, but if you change the yield to 10% simple, it grows to an incredible $100,000. That’s $50,000 free dollars you will actually receive.
Every deal is different. Therefore, every private mortgage is unique.
Many different factors must be considered when analyzing a deal to fund.a4 The situation, property condition, property location, and the timeline to loan payoff factor into the structure of a mortgage and affect the rate of return. AryMing Asset Funding have turned down many deals because they will never produce strong enough returns for our investors.
However, those that do qualify provide an excellent return for an investor. Here are some factors that take part into the return an investor can get from a direct lending:
- The purpose of the loan
- Loan-to-Value ratio
- The term of the note
- The quality of the borrower’s credit
- The exit strategy of the borrower
And here are ways AryMing Asset Funding can improve the rate of return:
- Collecting prepaid interest
- By adjusting the terms on the note
- Having the investor’s money repaid prior to the consumption of that prepaid interest
- Reinvesting the money over and over again into new deals
- And many other strategies that many private mortgage companies miss
The above factors make some deals better than others, but private mortgages offer considerably higher returns than traditional mortgages, and they outperform the stock market over the long term.