Although there are lots of people out there who have the potential to become successful real estate investors, very few attempt to. Most shrug off this avenue to riches because they don't have the money to invest in a property and they feel that it would be too difficult to secure financing in the form of a bank loan or loan from some other hard money lender. Little do they know that there is an easier and better way for a real estate investor to finance his properties - through private money lenders.
Private Money Lenders Explained
What is a private money lender? It's a loan that is financed through an individual instead of an institution. That individual has extra money he or she wants to lend and make a profit with. This is an incredibly flexible financing strategy, because you can borrow from someone who is a regular individual just like yourself, instead of having to jump through the hoops set forth by banks and other lending institutions, which have to follow strict rules and regulations when they decide whether or not to lend someone money. In other words, private money lenders don not have to follow these rules.
Why Private Money Loans Are a Better Way to Finance Your Properties
As previously mentioned, unlike banks and other traditional lending institutions, private money lenders are not bound by strict rules and regulations imposed by a board of directors or harsh credit standards imposed by Fannie Mae and Freddie Mac. Instead, private money lenders have the option to choose who they want to invest in, regardless of an investors financial statements or credit ratings.
What are the Benefits of Using a Private Money Lender?
As an investor, you can appeal and make your case to a private money lender, explain to them why they should invest in your property, and allow them to come to their own conclusion. But the benefits of a private money loan do not end there. If the lender is interested in your offer, the two of you can then work out a financing and repayment arrangement that benefits both parties. You and the lender can both state your expectations and agree on an interest rate and payment schedule that makes both of you happy.
A private money loan is a short-term loan and therefore, the private money lender may be willing to wait until after you have refurbished and sold the house to receive any payments. This lets you focus on fixing and selling the property instead of having to worry about paying for a property that hasn't actually made you any money yet.
Drawbacks to Traditional Hard Money Loans
While private money loans can be of benefit to both the borrower and lender, bank loans usually only benefit the lender. That's because the banks get to set the standards and are the ones who set the interest-rate and other fees as necessary. You also can't negotiate payment arrangements or other adjustments with them. That means that even if your credit history is perfect, and even if you're pretty sure you can get financing from a traditional lender, going through a private money lender will likely still be of greater benefit to you.
Summarizing the Benefits of Working with a Private Money Lender
Private Lender can lend freely and does not have to abide by tough rules and restrictions. Allows real estate investors with problematic personal credit histories to secure financing for their properties.
Provides for more open-minded communication between the borrower and private money lender. The borrower can negotiate a flat fee or interest-rate that is certainly a better deal for the borrower than that of a traditional loan.
Borrower can make custom payment arrangements that will be beneficial to them and the lender. Payments may even be suspended until the property is sold.
No financial application is required. Borrower can appeal directly to the private money lender and convince him to take a chance on the property in question.
The private money lender has the opportunity to see the borrower as an individual with goals instead of simply seeing the paper application that does or does not pass rigid, predetermined guidelines.
All of these benefits make private money loans the most flexible funding option for real estate investors. A private money loan allows you a variety of options and opens the door for many real estate investors who would otherwise be turned down by a traditional lender. - 15224
Private Money Lenders Explained
What is a private money lender? It's a loan that is financed through an individual instead of an institution. That individual has extra money he or she wants to lend and make a profit with. This is an incredibly flexible financing strategy, because you can borrow from someone who is a regular individual just like yourself, instead of having to jump through the hoops set forth by banks and other lending institutions, which have to follow strict rules and regulations when they decide whether or not to lend someone money. In other words, private money lenders don not have to follow these rules.
Why Private Money Loans Are a Better Way to Finance Your Properties
As previously mentioned, unlike banks and other traditional lending institutions, private money lenders are not bound by strict rules and regulations imposed by a board of directors or harsh credit standards imposed by Fannie Mae and Freddie Mac. Instead, private money lenders have the option to choose who they want to invest in, regardless of an investors financial statements or credit ratings.
What are the Benefits of Using a Private Money Lender?
As an investor, you can appeal and make your case to a private money lender, explain to them why they should invest in your property, and allow them to come to their own conclusion. But the benefits of a private money loan do not end there. If the lender is interested in your offer, the two of you can then work out a financing and repayment arrangement that benefits both parties. You and the lender can both state your expectations and agree on an interest rate and payment schedule that makes both of you happy.
A private money loan is a short-term loan and therefore, the private money lender may be willing to wait until after you have refurbished and sold the house to receive any payments. This lets you focus on fixing and selling the property instead of having to worry about paying for a property that hasn't actually made you any money yet.
Drawbacks to Traditional Hard Money Loans
While private money loans can be of benefit to both the borrower and lender, bank loans usually only benefit the lender. That's because the banks get to set the standards and are the ones who set the interest-rate and other fees as necessary. You also can't negotiate payment arrangements or other adjustments with them. That means that even if your credit history is perfect, and even if you're pretty sure you can get financing from a traditional lender, going through a private money lender will likely still be of greater benefit to you.
Summarizing the Benefits of Working with a Private Money Lender
Private Lender can lend freely and does not have to abide by tough rules and restrictions. Allows real estate investors with problematic personal credit histories to secure financing for their properties.
Provides for more open-minded communication between the borrower and private money lender. The borrower can negotiate a flat fee or interest-rate that is certainly a better deal for the borrower than that of a traditional loan.
Borrower can make custom payment arrangements that will be beneficial to them and the lender. Payments may even be suspended until the property is sold.
No financial application is required. Borrower can appeal directly to the private money lender and convince him to take a chance on the property in question.
The private money lender has the opportunity to see the borrower as an individual with goals instead of simply seeing the paper application that does or does not pass rigid, predetermined guidelines.
All of these benefits make private money loans the most flexible funding option for real estate investors. A private money loan allows you a variety of options and opens the door for many real estate investors who would otherwise be turned down by a traditional lender. - 15224
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You don't need an above average credit score or a large down payment to get financing for your real estate deals. Simply look for a Private Money Lender in your area.
