Borrowers have many personal reasons for choosing a private mortgage; two examples are:

1. Time Crunch: The Borrower has applied for a conventional bank mortgage, but the time-of-the-essence closing date is rapidly approaching, the bank is still completing its due diligence, yet the Buyer/Borrower simply has to close in a timely fashion in order to avoid losing a hefty contract deposit.

2. Transitional Property: Another typical case would involve a Borrower purchasing a vacant property that he plans to convert to another use (office to residential, for example). A bank would rather finance the deal AFTER the Borrower has executed his business plan, rented the property, and created cash flow. The Private Lender is willing to get more deeply involved than most banks, evaluating the Borrower’s past track record, the viability of the Borrower’s current business plan to convert/improve the property, as well as the value of the Borrower’s credit worthiness or other collateral. The savvy Borrower is also fully aware that he is only going to have the Private Loan outstanding for perhaps 12 months, and that paying 12% - 14% for such a brief period of time is far LESS expensive than bringing in much more expensive equity partners for the long haul. If an owner or developer raises additional equity by bringing in partners, it is certain that he will have to give up a substantial “piece of the pie.”

As part of our due diligence process, we require the borrower to substantiate the reason for the loan, to help ensure the borrower’s commitment to the property and the financial obligation.

Yes. There are many IRA custodians across the US that handle self-directed IRAs and are familiar with this type of investment. You can utilize all forms of retirement plans including Keoghs, Profit Sharing Plans, etc. We accept IRA and other tax-protected investments through third-party custodians such as Charles Schwab & Company, Trust Administration Services Corporation, First Trust Corporation, and Delaware Charter Guaranty & Trust Company. Tax-deferred investors (IRAs, Pension Plans, Keoghs and the like) should speak with their financial advisors about the appropriateness of this investment and any possible impact of UBTI (Unrelated Business Taxable Income).

Advantage Capital Equity Solutions makes monthly distributions of interest to its investors as the borrower’s payments are received.

There are inherent protections unique to mortgage lending which can significantly limit any downside risk when carefully implemented in the deal’s structure and in the mortgage documents.

The most obvious risk is that the Borrower stops paying the mortgage. With all our loans, this risk is mitigated by the low loan-to-value lending requirements we have. This ensures that the properties are equity-rich if there is a default. In addition, we may require personal guarantees from the Borrowers as further protection. For situations where the property is being rehabilitated, we may require an interest reserve to fund the interest payments during the renovation period. Similar reserves are also generally required for 2nd trust deed loans. The key is to choose the loans and the Borrowers very carefully and then anticipate (and incorporate into the loan documents) ways to offset the risk of a non-performing loan. Keep in mind that the mortgage documents assess late fees and default rates of interest that serve as powerful disincentives for Borrowers to make any late payments or to default on their loan obligations.

As in any investment opportunity, the quality of the management is of key importance. You want seasoned professionals in charge who have many years of experience successfully originating and managing a portfolio of private mortgages.

$25,000 is our minimum. This can be divided between regular and tax-deferred accounts.

Yes, Advantage Capital permits current investors to add to their investment. What time commitment do I have to make? Since most of our loans have a shelf life of 1-2 years, only investors comfortable with a 2-year time horizon should consider investing in private mortgages.