Yes, we require a minimum investment of $50,000 per project.

It refers to the amount of loan to be obtained in ratio to the current value of the property. For example, if a borrower requests a loan of $1,000,000 and provides collateral valued at $2,000,000, the loan to value (LTV) is 50%.

Since Miller Bates was formed in 2015, we have foreclosed on 7% of the loans originated (as of November 2023). Each time, we evaluate why the borrower lost the property and what we can learn from the situation to improve future loan opportunities.

They often fund more quickly, with fewer requirements. They are sometimes called “asset-based loans” because they focus primarily on the collateral whereas bank loans require strong collateral, excellent credit and positive cash flow to be thoroughly documented by the borrower. Additionally, traditional banks look to the capability of the borrower to pay back the loan from the borrower’s income, whereas private investors are comfortable looking primarily to a sale or refinance of the property as the method of repayment. Traditional banks often don’t provide the same combination of speed and transparency in their decision-making process. Finally, the borrower’s opportunity may fall outside the lending parameters of a traditional bank.

The advantages may include:

• • High rates of return on investment, typically between 9-13% APR.
  • Cash flow in the form of monthly interest distributions during the loan term.
  • Some risk mitigation, since loans are secured by real property, typically at a lower loan to value ratio.

The disadvantages may include:

• • A lack of liquidity.
  • In the event of foreclosure, the cessation of interest distributions and the need for active management and liquidation of the property.
  • In the event of foreclosure, future cash requirements to cover expenses such as property taxes.

Situations where private money loans make the most sense include those where the borrower:

• • Requires a quick closing and banks cannot meet the deadline.
  • Has more good opportunities than cash.
  • Wants to avoid raising money or debt from many different smaller investors.
  • Lacks the patience or time to deal with the bureaucracy of securing a loan from a bank.
  • Has an excellent investment opportunity, but does not have sufficient financial strength to get a bank loan.
  • Has a bank line of credit but needs a larger loan than is allowed under the existing bank line.
  • The borrower has an opportunity and the cost of interest and origination fee is small relative to the anticipated profit.

Private real estate investors are not regulated but are overseen by both state and federal government agencies.

Private real estate investors differ in several ways, including:

• • Their lending criteria such as loan to value (LTV) guidelines.
  • The type of real estate on which they lend.
  • The minimum and maximum loan size.
  • The geographic region they serve.
  • Their industry reputation.
  • The level of service they provide.
  • The interest rates they offer and the servicing fees they charge.
  • Timing of interest distribution.

To qualify for a loan, borrowers typically need to provide the following:

• • Verified collateral
  • Personal guarantees
  • Acceptable repayment strategy
  • Ability to service the debt
  • Description of intended use of the funds
  • Supporting documentation