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Rays the Roof Logo Rays the Roof Logo
(877) 229 0499

Private Money Lending Overview

A private money loans are made by non-institutional individuals to a real estate investors. The loans are secured by a note and deed of trust on real property. Essentially, private money lending is the lenders' opportunity to become the bank and reap the rewards. It's a great way to generate cash flow and produce a predictable income stream while still providing excellent security and safety for principal investments.

How It Works

The process is simple. First, we find an incredibly undervalued property we want to purchase. We perform our due diligence, which includes but is not limited to paying for a title search paying for a title policy. We provide the private money lender (PML) with all the specifics (see our sample investors presentation). Once our private money lender gives us the green light to buy, we borrow the funds from them to purchase and renovate the property. At the closing, the (PML) receives a promissory note. This is just part of the collateral they receive on their investment. Additionally, the (PML) receives a capital deed of the trust. This is a document that is recorded with the county clerk to publicly secure their investment against the real property. The (PML) also receives a hazard insurance policy, and will be notified if the insurance is not kept current. This is where the private lender is listed as the "mortgagee" for their protection in case a fire, natural disaster or if any other unforeseen circumstances occur. In the event of any damage to the property, insurance distributions will be used to either rebuild, repair the property or to repay the private money lender.

Before and After Renovation


The next stage is the property renovation. Before the repairs are complete, we begin our marketing campaign to list and sell the property. Improvements usually take within three to six weeks depending upon the amount of restoration that needs to be done. Once the renovations have been completed and the property is sold, at the closing the private money lender receives their principal investment, plus interest. This is typically between 8 to 12% a far greater return on investment than if the (PML) were to leave their money sitting in a bank.

The goal is to turn the private money lenders money over continually. This will ensure they will be making substantial profits and keep coming back to us for our services and build a long-term, mutually beneficial relationship.

The Benefits

The reason private lending is so compelling is that it is passive income and there's minimal time involved for the private money lender. There's no dealing with tenants, no manual labor used to renovate properties, and no dealing with unscrupulous contractors. You will have the sense of security that your money will be returned to you soon, with a sizable return on your investment that is secured by marketable and liquid real estate.

We, the borrowers do the hard work for the private money lenders. Finding the properties, putting our time and energy into renovating, marketing and selling them.

Supplemental Details

Multiple loans can be made at one time, profits are tax-free, there is no cap on earnings, and you basically earn money while you sleep. There are no government-backed guarantees 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 the legal right to take the home (virtually foreclose on us). However, we are always prepared for the unexpected, and our homes have thousands of dollars of equity in them. So in a worst case scenario, we just don't make as much profit as we initially hoped for.

Investment Terms & Conditions

Payment Schedule

Typically, we pay one large lump sum at closing on a short-term note. This is much easier to manage for both of us—especially if we're working out of a retirement account. On a longer note, we will pay monthly, just like a typical mortgage.

1st or 2nd Lien Position

The Investor, as "mortgagor," has the right of first lien holder and Power of Sale on the property. The 1st lien position is placed behind a senior mortgage. These are also known as the "first and second mortgage." The second mortgage is a junior lien because it's in 2nd position. The senior lien, or first mortgage, must be paid prior to the 2nd lien. While we do not have a minimum investing amount, we find that $80,000 to $150,000 are sufficient amounts to make an investment worthwhile when working with private lenders. When first investing with us, a lower initial investment amount may be agreed upon to ensure you're comfortable when working with our company. We never accept more than 10% of anyone's net worth for investment purposes.

Mortgage Terms

The majority of our loans are set up on an 8 to 12-month note; however, it depends on the size of the project. If we are doing a tear down and rebuild, we will have to wait on the county inspectors for many approvals, thus causing delays. We account for all of those details upfront and will give you an estimated time frame for the return on your investment. We do not pool funds—your funding will be tied to one piece of property secured by a deed of trust.

Are you a real estate financier or interested in becoming one?

Are you looking to purchase wholesale properties or invest your hard-earned money with high returns? Ray's The Roof R.E.I., LLC has the experience, know-how, and infrastructure to offer you opportunities in your real estate investment endeavors.

Whether you are looking for a rehab project to work on or would like an alternative to investing your money, we're here to help you shape your financial future. Contact us today if you'd like to learn more about the options we offer. Please provide the following information:


Investing in financial and real estate markets involves a substantial degree of risk. There can be no assurance that the investment objectives described herein will be achieved. We will never accept more than 10% of anyone's net worth for investment purposes.