If you are after real estate investment, then it is highly recommended if you would opt for private money loans. This is actually a good option in case that conventional loans aren’t available. 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. 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 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. Besides, why would you opt to lose an investment opportunity just because you can’t acquire 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. And even if buyers/investors qualify for the traditional long term loan or financing, it could take them long enough to get and at the same time, the deal could be lost when you have the traditional 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 may have a different policy that they follow such as verifying references, checking credit or verifying employment. Still at the end of the day, the main focus of private money lenders is to see how fast you could pay them and whether or not there’s enough equity on the property.
One thing that you must not forget is to have a list of your prospective money lender so you can reach out to them easily when you find a property.