5 Qualities to Look For in a Private Lender

Choosing a Lender Who Will Be an Asset

Investing in real estate Investing in real estate can be risky. A savvy investor needs to know how to choose a private lender who will be an asset to them. Not all are created equal. Here are five qualities to look for in a private lender:

 

Specialization:

The borrower needs a lender who is in business solely to make loans, i.e. has no alternative ways to make money. It will make the lender more interested and easier to deal with.

 

Speed of Approval:

One of the advantages a borrower has with a private lender rather than a bank, is that the latter offers speed of approval. A serious investor needs a faster turnaround.

 

Experience:

A lender needs experience in the chosen field or endeavor. They will then know what to expect and how to be an effective partner. An experienced lender will be conservative, financially stable, and aggressive like the investor.

 

Few Restrictions

A private lender will generally have fewer restrictions than a bank, offering lenders loans that the bank would not even consider.

 

Relatively Low Rates:

The borrower will have to realistically expect higher rates with a private lender as opposed to a bank, but even these should not be exorbitant. A four-point difference will not matter much with a short-term loan (about three years).

Banks are usually the go-to institutions for borrowers. However, a good private lender offers benefits that make it an attractive Plan B. A private lender should be easier to deal with, faster, more flexible and, if it knows the real estate market, a good partner that will help the borrower solve problems when they arise.

One concern borrowers have that gives them pause concerning private lenders is the higher interest rate. Such a thing is a minor flaw given that most real estate investment loans will be short-term. If the investor has experience rehabbing properties, a solid plan for repayment, and a good exit strategy, the higher interest rates that private lenders have should be of little consequence. The benefits will outweigh the drawbacks as compared to banks.

Once you have found the private money lender who is right for you, you will be able to form a relationship that can last through the years and be very beneficial to the both of you. Give us a call today at California Private Money Lenders to see how we can help you with private money or hard money loans at 707-315-1119 or fill out our contact form or short borrower’s form and one of our trained private money loan specialists will in touch promptly to answer your questions.

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4 Real Estate Investment Tools Every Real Estate Professional Should Use

Tools to Help Streamline Your Real Estate Business

Realistically, there are more than four tools to building and boosting your business, however, these are the ones we will currently be focusing on. From finding the right property for your goals, to making certain that your business gets the public’s attention, these tools can make a genuine impact. Wholesale buyers, Rehab Flippers or Rental Investors should consider putting these practices in place. Whether you are new to the profession and just getting started, or are a veteran, these concepts should be part of your personal portfolio.

 

Plan Your Exit Strategies:

Determine before you walk through the property what you not only intend to do with it, but how you will finish your involvement. Even rental holdings need to have a solid plan for turning it over. By in large, with investment in real estate, the profit is most consistently realized in the turnover, the resale. Many hard money lenders will expect to see exit strategies as part of the loan negotiation. Don’t just put all your eggs in one strategy basket, cover the contingencies in case one becomes unworkable. Take the exit strategies in the door with you, at a minimum as a concept, based on the projection for the property. Buy in low, rent advisedly, sell out high.

 

Integrate Social Media:

Facebook, Twitter, LinkedIn, YouTube, Pinterest, and any other cross-linkable sites you want to add in, are some serious free connection tools. Yes, you can upgrade some of them by subscribing to the ‘professional’ models, but even the basics are useful. Every day more and more people are becoming internet connected. The Pew Research Center data shows that from an average of 50% in 2000 the overall adult population was at 80+% online in 2013. One of the most dramatic rises is in older adults moving from 14% to 59% in the same timeframe. Search for properties, find networking opportunities, connect with wholesalers or flippers and buyers. The possibilities are wide open.

 

Know Your Tax Code:

Flippers and long-term investors are looked at differently by the IRS. Understanding, fully, the arcane workings of the code may never be an absolute, but being aware and talking with your accountant is a must. The category of flipper is taxed based on a retail stock rate. There is no ‘magic number’ of sales that make you a flipper by the tax code. One quick resale may be enough. Those deemed long-term investors are under a different tax rate, which can make a very significant difference to your business.

 

Stay In Tune With Your Partners:

If you are asking ‘what partners’ please go back to researching this profession. Partners include lenders, realtors, flippers, construction contractors, material suppliers, and others that are a vital part of your operation. These are not peripheral considerations. These people and other businesses, that you have cultivated a relationship with, are genuine assets. Being aware of changes in the market, how it could affect all parts of your network, keeps you from being caught shorthanded. Boom markets can boost or crunch your cash flow. Bust markets can put trusted partners out of business. Transition periods can entice quick cash types to attempt the business. Maintaining contact with your network means fewer negative surprises.

Probably one of the best business strategies for a real estate professional is having a trusted private money lender as a go-to-source for both quick funding loans and advice. Our team has over twenty-five years of experience helping private investors and real estate professionals receive sound advice when it comes to real estate investment and loans. Give us a call today at 707-315-1119 or fill out our borrower form or contact form and one of our private money lending professionals will be in touch promptly to answer your questions.

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