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Private Lending for Real Estate Investors: Learn the 5 Danger Words NOT to Use in Advertising

By Michel Lautensack

Republish: EasyPublish™ Published: 23Jul2009 Word count: 485 Viewed: 263 time(s) Get Free Content For Your Site

We're going to learn the five words NEVER to use with your Private Lending marketing pieces. There have been cases out there where a state SEC has interpreted these words to be fraudulent statements.

Let's go through the five words and why they could potentially be misinterpreted.

Guarantee/Guaranteed

The first of the five words that we should not be using is guarantee or guaranteed. You are not guaranteeing these investments with a personal guarantee. So don't use the word guaranteed. The only person that can guarantee anything is the US Federal Government.

I would stay away from the word in pretty much all contexts, unless you're talking about something completely different, meaning, "I guarantee to call you back in 24 hours. I guarantee to send the report to you in 24 hours. I guarantee to provide you with a great dinner at the seminar." That's all fine. That has nothing to do with what we're talking about.

Low Risk

The word "low risk" is also something to stay away from. Low risk could be construed as being like a CD or money market. It could be interpreted to be a fraudulent statement.

Obviously, everybody believes that these types of private loans are fairly safe. I understand and they are for the most part relatively low risk. However, low risk may be interpreted by the other person as meaning, "I thought they were a low risk like a money market" or "I thought they were low risk like a CD". I didn't know they were high yield securities. I would stay away from this word.

Secured

Do not use the word "secured". You have to be very careful here. You can use the word secured in some instances. You can say, "Private mortgages secured by real estate." That is a factual statement. It is secured by the real estate.

So you can use it in that context, but be careful how you use it. Don't say, "well secured" or something of that nature. Again, this one of those words I'd just be very careful with. Think them through a little bit and think of somebody potentially misinterpreting what you're meaning.

Safe

Do not use "safe". Again, I've used the word safe in some cases. I have used it in my postcards and flyers. Today, I would not recommend you use the word safe. Find some alternatives. Again, safe can be interpreted as being like a money market safe, like a CD safe, a savings bond safe. All of these types of things could be mis-interpreted.

Risk Free

Do not use "risk free". I would not use the words "risk free" because there is risk in this type of investing. No matter what you say investing in real estate mortgages has some risk. Do not tell people there are risk free and stay clear of misleading people.

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