If you are after real estate investment, then it is highly recommended if you would opt for private money loans. This is perfect if conventional loans are not available or the least suitable option at the moment. In reality, there are various options where you can find top private money lenders including 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. Private money investors are going to lend you money on short term with high interest rates as well as upfront fees. While the points are ranging from 4 to 10, these private investors are actually more focused on the equity of the property than your credit. In case that you can prove that there is good equity and that you have a strong strategy to repay them, you won’t have any problems in finding private money lenders to help you out.
In this tight financial market that we’re experiencing, it may make sense to look for a private money investor. Not only that, why would you choose to lose an investment opportunity simply because you cannot get it through conventional financing? With a private money or hard money loan, you will be able to get it as short term loan. Many investors prefer this type of loan due to the reason that they want money fast and as a result, prevent losing profits like real estate foreclosure auction opportunity, pre-foreclosure and the likes in which time is of essence and being able to have cash fast is vital. Even if buyers/investors qualify for the traditional long term loan or financing, this could take them quite a while to get and it can also make them lose the deal when they have the loan after 30 to 45 days.
In comparison to commercial transactions, private transactions are not regulated by the federal or state laws. Because of this, it allows the private money lenders to decide faster on your request. Every individual money lender may have a different policy that they follow such as 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 nice tip to follow when you are working with a private money lender is to have a list so by that, you can easily reach out to them when you find a property.