One of the best options that you can get for your real estate investment is through private money loans. In case that the least suitable option is not a good fit or if traditional loans are not wise, then this would work just perfectly. As a matter of fact, there are a number of recommendations where you could find the best private money lender similar to mortgage consultant, investment clubs, internet, real estate seminars, family members, lawyers, financial advisors, accountants, CPAs and the likes.
In general, these private money lenders are hedge funds, private individuals, portfolio lenders, agents of REO or bank owned properties, institutional investors or a friend or family member that you might know personally. The usual schematics for private money investors is that, they will be lending you money on short term but with upfront fees and high interest rates. The points could range from 4 to 10 and these private investors are focused more on the property’s equity than your credit. In the event that you could prove them that there’s good equity and a firm strategy to repay them, you’ll not have a problem in finding private money lenders to help you out.
Today, we are experiencing a tight financial market and it makes more sense to work with a private money investor. After all, why would you allow yourself to lose a potential investment all because of the fact that you cannot get it via traditional financing? With hard money or private money loan, you can have it as a short term loan. A lot of investors do prefer this loan because of the reason that they need money fast and because of that, it prevents them from losing profits such as real estate foreclosure auction opportunity, pre-foreclosure and the likes where time is important and having cash fast is vital. Even if buyers/investors qualify for the traditional long term loan or financing, it might take long to get and also, the deal might be lost when you have conventional loan after 30 to 45 days.
When compared to commercial transactions, these private transactions are not regulated by federal or state laws. With this in mind, private money lenders may be able to decide faster. Every individual money lender might have different policies that they follow like verifying references, checking credit or verifying employment. On the other hand, majority of the private lenders are more focused on how fast you will be able to repay them and whether or not the property has equity.
A good tip to be followed here when working with a private money lender is to create a list of your options so you can reach them out easily when you find one.