6 Reasons to Use Private Money Lenders

6 Reasons to Use Private Money Lenders for Real Estate Investments


Private money lenders are a great option for investment properties. While traditional banks look at money lending as an exercise in taking advantage of interest rate spreads, private money lenders look at investment properties the same way that borrowers do, as an investment. This means that the goals of private money lenders are perfectly aligned with yours as a real estate investor. Here are 6 reasons to use private money lenders for your investment properties:

1. Private lenders for real estate are offering competitive interest rates. Since a loan on an investment property is secured by a recorded Deed of Trust, private lenders can offer interest rates that are competitive with the open market. Additionally, since private lenders for real estate may also be looking for investment properties, they are more likely to offer these rates on properties without a current cash flow.

2. It is less frequent for private loans to be packaged and resold. Private lenders for real estate look specifically at you and your property to make an investment decision, and once they have found a good risk they are unlikely to sell their investment. This allows you a measure of confidence that you will still be doing business with the same partners for the life of a loan.

3. Private loans are fund faster and are more flexible than other loan options. Since private lenders use the same investing principles as real estate investors, they are able to make a quick decision, allowing you to avoid the lengthy process of traditional bank underwriting.

4. Your FICO score is not as crucial with private lending. Private lenders for real estate do not rely as heavily on your FICO score, instead they use their expertise to determine if your loan is less risky based the property value, and your credit and income.

5. Private lenders’ Loan to Value ratios may be less strict. Since private lenders do not have the same underwriting process as traditional lenders, they have more flexibility to look at other factors influencing loan repayment.

6. Private lenders for real estate give you a more flexible access to loans.  With private loans you still have the same protections as with traditional bank loans, but at the same time you can take advantage of the private money loan process that moves quickly and is more flexible than conventional permanent financing.

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