If you think banks, credit unions, and mortgage brokers are the only sources of funds for your investment properties, think again. There are a lot of ways to get the money to buy investment properties without having the need ask traditional banks for help. One of these methods is acquiring private money.
If you want your real estate venture to be a success, you need to make sure to employ good private mortgage lenders. If not, then the chances of getting a great deal is going to be greatly reduced because you will not be able to close quickly with a traditional lender
Private Money Lenders are organizations or individual investors who provide loans to anyone who wishes to move fast on real estate investments. Private money lenders can also lend money for a start up business needing capital to get up and running. They will also finance projects the banks will decline. Private lenders also require fewer documents that a mortgage broker, banks, credit unions and other non-private lenders would request.
Private lenders’ main concern is property and not the borrower’s credit history or bank statement. The motto of private hard money lenders is simple: If you have a good deal in hand, they will fund you, no matter what. But if you take a crap deal to them, then they won’t fund you, even if you have excellent credit history. Private money lending has less strict under writing procedures. It usually requires filling out a form, getting a value confirmation via appraisal or BPO, and the hard money loan is funded. The hard money phrase is used because the money borrowed does not follow the policies of traditional banks and it has a balloon payment at the end of a relatively short term..
To obtain private money, however, you have to convince the lender the collateral value for the loan is sufficient. This means the property you want to rehab or flip, has a higher value than the loan amount. In addition, you have to make sure that the title is clear and that the property can be sold easily or the lender will not fund a loan.