5 Important Qualities to Find in Private Lender

Private Lender Top Qualities

 

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

 

Specialization:

The borrower needs a private money lender who is in business solely to make loans, i.e. has no alternative ways to make money. It will make the private money 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 private money lender needs experience in the chosen field or endeavor. They will then know what to expect and how to be an effective partner as your private money lender. An experienced lender will be conservative, financially stable, and aggressive like the investor.

 

Few Restrictions:

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

 

Relatively Low Rates:

The borrower will have to realistically expect higher rates with a private money 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 private money loan (about three years).

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

One concern borrowers have that gives them pause concerning private money 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 money lenders have should be of little consequence. The benefits will outweigh the drawbacks as compared to banks. Give us a call today at 707-315-1119 or fill out our contact form and one of our trained private money lending professionals will be in touch promptly to show you how California Private Money Lenders can be the solution to your lending challenges.

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