The Advantage of Whole Note Investing
Flynn Family Lending can help you diversify your portfolio with alternative investments that provide low risk, high returns, and full control.
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Frequently Asked Questions
What is the difference between whole note investing and a pooled mortgage fund?
In whole note investing, you are the only one named as the lender on the Promissory Note and Deed of Trust which secures your loan against real property. When you invest in a pooled mortgage fund, you are a fractional beneficiary with many other investors and it's the actual fund which is named on the loan documents.
What are the pros and cons between whole note investing or investing in a pooled mortgage fund?
Unlike pooled funds, we like the security of having you, as the lender investor, individually named on the Deed of Trust which secures the loan for your benefit and is recorded with the County. In a mortgage pool, you never know what deals are being funded, exposing you to diminished returns if certain loans in your fund don't perform well. Funds can also go bankrupt putting your investments at risk.
Mortgage pools are typically only available to accredited investors and require a specified minimum contribution and time commitment (up to 3+ years with some companies) while investing in whole notes with Flynn Family Lending can be done with as little as $75,000 and you are only committed to the duration of the loan terms.
What is the process for selecting a loan to invest in?
We give you full control over which loan you decide to lend against. In order to make an informed and educated decision, we provide a loan overview with details about the loan rates, terms, and conditions, as well as information related to the real property (or properties, depending on the loan) used as collateral. This will include property condition and images, current and future valuations after rehab - if applicable, and comparison properties recently sold. Additionally, all loans are carefully scrutinized and underwritten by our team prior to being presented to you.
If you have questions about the loan, we will walk you through those and should you choose to pass on a particular loan, we will work to find a different deal that may suit your investment criteria better.
How do you choose loans for your investors and who gets priority?
Each lender investor in our Flynn Family circle has unique investment needs and deal preferences. That said, we strive to understand what you individually need and desire out of your investments through us - loan size, position, collateral preferences, risk tolerance, etc. are all taken into consideration when we present you with a deal to review. Loans are not shared with multiple investors as we do not like creating a competitive environment amongst our lender investors.
Our pipeline of borrowers is strong and loan requests come in daily making it easy to find and fund deals for all our investors regardless of your deal or risk profile.
Why would borrowers want to pay such high interest rates for a loan? Isn't this just for clients who can't get financing conventionally?
Private money, business loans are not just for credit-challenged borrowers as many would think. Most of our clients are real estate investors who desire quick, bridge loans to purchase and rehabilitate real estate. Since time is of the essence, these investors are willing to trade lower interest rates with the ability to fund fast and without a lot of paperwork.
If you don't require a lot of paperwork from the borrower, then what protects my loan?
We place greater emphasis on the borrower' use of funds, equity buffer in their real property and exit strategy. While credit-worthiness is important, real estate backed loans are only as good as the loan amount against the market value of the property - also known as loan-to-value. Therefore, if you are lending against a property that is worth $400,000 and the loan amount is only $100,000, the loan-to-value (LTV) is only 25% - leaving you with 75% of the property's value ($300,000) as protection against default.