There are a lot of people out there who could potentially become very successful real estate investors, but most people don't even try. Why? Because they themselves don't have the money to invest in property and they think it would be too difficult to try to secure financing through traditional venues, such as a bank or other type of "hard money" lender. However, what they probably don't know is that there is a better and easier way for real estate investors to finance properties and thus have success. That is, through private money lenders.
Private Money Loans: An Explanation
A private money lender is an individual who has extra money to lend and who wants to make a pretty decent profit off of that money. This is the most flexible way to finance properties for real estate investors. As a real estate investor, you get to borrow money from a single individual, who isn't affiliated with any institution. Instead, they're just like you and me; therefore, the process can be much less impersonal and formal. While banks and lending institutions have rules and regulations that have to be followed when lending out money, private money lenders do not have the same restrictions.
Why Private Money Loans Are a Better Way to Finance Your Properties
Banks and other traditional lending institutions are bound by strict rules and regulations. They have to follow these regulations exactly. However, private money lenders can choose who they want to lend to, regardless of the investors' credit rating, financial statements, and other financial benchmarks.
What are the Benefits of Using a Private Money Lender?
As a real estate investor, you can approach a private money lender and make your case with them individually. You can explain to the private money lender why you are someone they should invest in, and after you've done so, they can make their own decisions. However, there's more to it than that and the benefits go even further. If the private money lender is interested in what you have to offer, you both can sit down and work out financing and repayment arrangements that are of benefit to both of you. You can both state what you want out of the arrangement and agree on a payment schedule and interest rate that satisfies both of you.
In addition, a private money loan is a short-term loan. This means that the private money lender might very well be willing to wait until after the property has been "flipped" to receive any repayment. This gives you chance to fix and sell the property without worrying about whether or not you can make payments on a property that hasn't actually made you any money.
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.
In Summary: the Benefits of Private Money Loans
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.
Private lending can mean much more open communication between the borrower and private money lender. The borrower and lender can negotiate an interest rate or flat fee that will almost always save the borrower money over that of a traditional loan.
Both the borrower and private money lender can negotiate payment arrangements that will benefit both of them. The lender may even be willing to forgo payments until the borrower has sold the property.
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.
Private Lender will see borrower as a real person with a real goal, instead of just a paper application that must pass ridged guidelines.
For all of these reasons and more, private money loans can be the most beneficial and flexible funding option for you as a real estate investor. Using a private money lender lets you have a variety of options and may give a chance to real estate investors who would likely otherwise be turned away by a traditional lender. - 15485
Private Money Loans: An Explanation
A private money lender is an individual who has extra money to lend and who wants to make a pretty decent profit off of that money. This is the most flexible way to finance properties for real estate investors. As a real estate investor, you get to borrow money from a single individual, who isn't affiliated with any institution. Instead, they're just like you and me; therefore, the process can be much less impersonal and formal. While banks and lending institutions have rules and regulations that have to be followed when lending out money, private money lenders do not have the same restrictions.
Why Private Money Loans Are a Better Way to Finance Your Properties
Banks and other traditional lending institutions are bound by strict rules and regulations. They have to follow these regulations exactly. However, private money lenders can choose who they want to lend to, regardless of the investors' credit rating, financial statements, and other financial benchmarks.
What are the Benefits of Using a Private Money Lender?
As a real estate investor, you can approach a private money lender and make your case with them individually. You can explain to the private money lender why you are someone they should invest in, and after you've done so, they can make their own decisions. However, there's more to it than that and the benefits go even further. If the private money lender is interested in what you have to offer, you both can sit down and work out financing and repayment arrangements that are of benefit to both of you. You can both state what you want out of the arrangement and agree on a payment schedule and interest rate that satisfies both of you.
In addition, a private money loan is a short-term loan. This means that the private money lender might very well be willing to wait until after the property has been "flipped" to receive any repayment. This gives you chance to fix and sell the property without worrying about whether or not you can make payments on a property that hasn't actually made you any money.
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.
In Summary: the Benefits of Private Money Loans
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.
Private lending can mean much more open communication between the borrower and private money lender. The borrower and lender can negotiate an interest rate or flat fee that will almost always save the borrower money over that of a traditional loan.
Both the borrower and private money lender can negotiate payment arrangements that will benefit both of them. The lender may even be willing to forgo payments until the borrower has sold the property.
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.
Private Lender will see borrower as a real person with a real goal, instead of just a paper application that must pass ridged guidelines.
For all of these reasons and more, private money loans can be the most beneficial and flexible funding option for you as a real estate investor. Using a private money lender lets you have a variety of options and may give a chance to real estate investors who would likely otherwise be turned away by a traditional lender. - 15485
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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.
