What Does It Mean to Be a Private Money Lender?
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.
What Are Private Money Lenders?
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.
Finance Your Properties Through a Private Money Lender: a Better Way
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 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.
What's more, since a private money loan is a short-term loan, the lender may even be willing to wait until after you flip the property to receive any repayment at all. This allows you to focus on fixing and selling the property, without the anxiety that can be associated with payments on a property that hasn't brought in 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
If you work with a private money lender, the private lender can lend money to you as he sees fit and does not have to abide by the guidelines traditional lenders do. Because of this, if you have a less than spotless personal credit history, you may still be able to secure financing for your 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.
In general, you don't need any financial application to borrow money from a private money lender. Instead, you can talk directly with the lender to try and convince him to take a chance on you and 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.
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.
What Are Private Money Lenders?
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.
Finance Your Properties Through a Private Money Lender: a Better Way
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 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.
What's more, since a private money loan is a short-term loan, the lender may even be willing to wait until after you flip the property to receive any repayment at all. This allows you to focus on fixing and selling the property, without the anxiety that can be associated with payments on a property that hasn't brought in 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
If you work with a private money lender, the private lender can lend money to you as he sees fit and does not have to abide by the guidelines traditional lenders do. Because of this, if you have a less than spotless personal credit history, you may still be able to secure financing for your 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.
In general, you don't need any financial application to borrow money from a private money lender. Instead, you can talk directly with the lender to try and convince him to take a chance on you and 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.
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.
About the Author:
Stop worrying about qualifying for loans and take the first step to becoming a successful real estate investor. Learn more about getting funding from Private Money Lenders.
posted by Debt Consolidation Loan at
2:43 AM
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