Frequently Asked Questions (FAQs)
What are the loan terms?
Loan terms are flexible. Our ideal arrangement is an interest-only loan for ten years, with repayment of the entire principal at the end of the ten-year period. For example, an investment of $10,000 at 10% APY for ten years would generate ten annual payments of $1,000 each, plus repayment of the $10,000 at the end of the ten-year period.
What are the requirements to become an investor?
Investors must be United States citizens or resident aliens.
What are the minimum and maximum investment amounts?
We are currently limiting investors to a minimum of $10,000 and a maximum of $100,000 per transaction.
What does “personal guarantee” mean?
Personal guarantee, in simple terms, means that if we fail on our obligation to repay the loan, you have the right to come after our personal assets (i.e. assets that are not secured by the loan).
Will you verify your personal income and credit scores?
We are willing to share this information with potential investors who wish to make a sizable investment ($25,000 or more). Both of our credit scores are above 750.
May I see a sample of the Promissory Note?
Of course, please send us your email address and we will send you a sample copy.
Are there any additional costs associated with the loan?
There are no extra or hidden costs.
Who prepares the Promissory Note?
Erin Lokhandwala, Esq. will prepare and execute the documents.
May I request repayment of the loan before the term ends?
For investors who choose Option C (7% APY and no fixed term), you may request a return of your investment with three months' notice. For investors who choose options with a fixed term, once we invest your money in real estate, it will be locked. If you express a desire to pull out the money, we will do our best to repay the full loan amount as soon as we have funds available. However, we do not guarantee a return of your money until the end of the loan term. Please only invest in us if you agree with the loan terms.
What happens if you repay the full loan amount early?
There is no penalty for early repayment.
How are loan payments issued?
Our general practice is to make loan payments by check sent via Certified Mail. However, we can also make payments via direct bank transfer, at lenders’ request. Banks might charge small fees for direct transfers.
Do you allow a grace period before a payment is considered late?
Our standard Promissory Note allows for a fifteen-day grace period for both the interest and principal.
What happens in the event of a nonpayment?
We have every intention of repaying your loan on time. However, in the unlikely event of nonpayment, you have the option of filing suit against borrowers for recovery.
Will I receive my principal investment back even if the real estate market declines?
Yes. We plan on keeping our properties as lifetime rental investments. We don’t do fix-and-flips or other high-risk transactions. Any market downturn would not affect our plans to keep and rent our current investment properties, and certainly would not impact our commitment to investors.
Is Lokhandwala Enterprises USA, LLC a certified real estate business?
Yes, Lokhandwala Enterprises USA, LLC (a.k.a. Lokhandwala Realty) is a registered Maryland business.
Am I lending the money to Lokhandwala Enterprises USA, LLC or to Erin and Parvez Lokhandwala?
You are lending money to Erin and Parvez Lokhandwala personally, not to the business. All properties are owned by Erin and Parvez Lokhandwala. Lokhandwala Enterprises USA, LLC acts as a property management company for the Lokhandwalas.
Does my investment entitle me to a stake in Lokhandwala Enterprises USA, LLC?
Your investment does not entitle you to a stake in Lokhandwala Enterprises USA, LLC. As such, you may not participate in the management of the company.
How will my money be used?
We will use investment funds to expand our portfolio of high-quality residential rental properties specifically targeted to serve Baltimore’s incoming physicians-in-training.
What happens to my money if Lokhandwala Enterprises USA, LLC goes out of business?
If Lokhandwala Enterprises USA, LLC were to go out of business, your investment would still be secured by the personal guarantee of Erin and Parvez Lokhandwala.
How will you keep my personal information safe?
We don’t collect any personal information at the outset; however, at tax time we can discuss what is required to generate the 1099-INT form and how to securely provide that information.
Are my investment earnings taxable?
Yes, the investment earnings are taxable. Earnings will be taxed in the same manner as the interest you earn from money in a bank savings account. Please ask your tax consultant how the investment will impact your taxes. Generally, for most investors, this income will be taxed in the same manner as interest earned from banks.
What tax-related documents will you generate for investors?
We will generate a 1099-INT form for investors (similar to those issued by banks) during the tax season.
This is all too complicated and overwhelming! Please simplify this for me.
We are happy to discuss any questions via phone or in person. Contact us to schedule a meeting.