Since the credit bubble first burst, traditional sources of investment property loans have all but dried up, forcing real estate investors to find alternative sources of capital. Seasoned investors have been using private money for years, so it’s not an uncommon method of real estate financing, but when money was easy to come by at conventional banks, most investors took the familiar route. But now many people are realizing that finding the real estate deals is the easier part of the business these days, but getting a loan to buy the property is the hard part! So what do you do?
A great many real estate investors are turning to private lenders to fund their purchases. Private lenders can be anyone. They could be friends you already know, either very well or just casually. They could be relatives. Or they could be business owners, doctors, attorneys, and other professionals you do business with everyday. Private lenders in general don’t promote, and may not even realize they have the potential to make great money until they meet an investor— like you— who educates them. Since no one is getting a very good rate of return on their money these days, whether it be in a CD, mutual fund, IRA, or in the stock market, many everyday individuals you never thought of before as lenders could have money to lend to you for your real estate deals. It’s a win-win situation: they make a much higher interest rate than they could make elsewhere, and you set the terms you know you can afford.
Imagine how many great deals you could do if you had access to lots of quick cash—other people’s—not out of your own pocket. Imagine never again letting deals pass you by due to the rules and limitations of banks! And also image going to closing and only signing two or three documents instead of two inches worth! Private real estate money deals are incredible simple and the total paperwork is normally less than 10 pages. In addition, investment property loans from private real estate money sources usually have no points and little upfront or back-end fees. You won’t find that at a conventional bank!
Establish your credibility with those who have “deep pockets” and you’ll have access to all the money you need for any estate deal. If private lending is new to you, first educate yourself about this type of real estate financing. Knowing the advantages can mean the difference between making a good deal work, or losing yet another to your competitors.
