PML - FAQ

HIPPO REI, LLC specializes in residential and commercial properties, as well as new developments and investment properties.

Our goal is to purchase our homes below market value so that we build instant

equity into the home the minute we close on the deal. Once the house is under

contract, but prior to when we close on the purchase, we present our private

money lenders (PML’s) with an opportunity to invest. This means our PML’s will

fund the purchase price, the renovation costs (or both) and/or all of our holding

costs. Our PML’s also have an opportunity to earn double digit returns, unlike the

returns we typically see in the bank, stock market or retirement accounts, with a

protected, secured and insured asset.

I’ll provide a promissory note summarizing the terms and conditions of your loan,

I’ll obtain a builders risk insurance policy listing you as a beneficiary/loss payee

and as I mentioned earlier, I’ll also record a mortgage against the property with

your name attached to it so that I can’t sell the house without your written

consent.

We make our money when we buy. That said, when we buy below market value

and build instant equity in the home, when we obtain wholesale pricing from our

contractors and when we work with a team of industry experts, we are able to

provide our investors with higher returns. Also, depending on the deal, we are

able to eliminate the realtor commissions, broker fees, loan fees, etc.

Banks have a very time consuming and cumbersome process. We can’t close

quickly if we work with a bank. Most of the homes we buy require a quick close

in order for our offer to be competitive. Also, many of the homes we purchase

are non-conforming (don’t have functional plumbing, may have mold, no

kitchen or bathrooms, etc.) so most banks typically won’t lend on those types of

properties. Plus, banks will cap the number of loans that they’ll fund.

All of my contracts are set up with a 6 month term but my goal is to pay you

back ASAP. As soon as the renovated home sells, you will receive your principal

plus interest back in one lump sum at closing. Your name and balance due will

be captured on the HUD statement as a lender. Also, I will take care of filling out

all of the loan docs on your behalf so that all you need to do is review and

approve them. I will also cover your attorney fees if you’d like him/her to review

the loan docs. They are very straightforward and easy to read.

 I’d be more than happy to open up an escrow account with a title company

and I can draw from the account as needed. I’ll cover all of the fees associated

with setting up this account as well. Or, since I travel so much and prefer not to

wait until 1-2 days prior to closing, you can also wire the funds directly to my

business checking account which will be solely dedicated to your property. Also, I will begin to accrue the interest as soon as the wire is processed so that we don’t have to wait until 1-2 days prior to closing. This is my preferred method but I’ll follow your lead here.

 Most of our projects are completed in 6-9 months. If you look at historical market

trends, you’ll see that massive dips in the real estate market won’t usually

happen in a matter of months. Sure, there is always an element of risk

associated with every investment made but all decisions made are data driven

which significantly reduces our risk and then again, we always protect, secure

and insure our investors funds.

 If you’d like to keep your money working for you, then we can roll your principal

and interest earned into a new project and create a new set of loan docs.

Many of my lenders do this. Otherwise, I’ll pay your principal and interest back

as soon as the home sells as a part of the closing process.

 Nope! We pay for all closing costs, escrow fees, attorney fees and wire fees. 

 The proof is in the paperwork I used to protect, secure and insure each of my

private money lender's investments. All of the contracts have been reviewed by

my attorney (your attorney can review them as well and I will cover that cost)

and the recorded mortgage which secures your lien position will be signed and

notarized by the County Clerk and Time & Date stamped at the time of filing.

Also, as I continue to educate you on our strict due diligence process which

includes 12 different credibility pieces, your confidence in investing with me will

continue to go up.

 My estate will continue to manage your investment as agreed to in the loan

docs provided.

Every year, my team will provide you with a 1099 form for you to share with your

CPA or tax consultant. The statement will show how much interest you have

earned for the year. It will be categorized as “Interest Income” and you’ll need

to pay tax on it unless you are getting paid on money you loaned from your

“Self-Directed Retirement” account.

 No problem! I can have my passive custodian hop a call with the both of us and

explain the process to you directly. He set up all of my retirement accounts and

he helps me manage them so he can help you understand which retirement accounts you can leverage from in order to invest in real estate and he can also

help you with next steps if you decide to move forward.

 You'll get paid whether I do or not. My job is to make this a passive investment

for you. If the house doesn't sell "on time" then once the right buyer comes

along, I'll end up making a smaller profit. This is something we also discussed

when I walked you through my property analysis template. If you look at the

projected profit, you'll see how much that will drop month over month as the

house sits on the market. At the end of the day, my job is to ensure you still get

paid. Even if I don't profit on the deal, my goal is to cover the loss out of pocket.

 I am still limited to the number of homes and types of properties that I can buy

with my own money. But with private money, I can buy an infinite amount of

properties and grow and scale my business much faster.