Dec
18
Why Borrow Private Money?
By
Jamel Gibbs asked:
Using private money investors can be a real gem in your real estate business. There are many benefits to using private money as opposed to bank financing, hard money, lines of credit, and other forms of financing.
I have been using private money since I started in the real estate business. If I didn’t have private money investors, I wouldn’t know where my business would be right now. With private money investors there are no credit checks, no financial information given, and no monthly payments if you structure the deal right. No questions asked.
Grant it, in the beginning you will have to answer some questions before someone sends you a check for $500,000. But the questions will be nothing compared to what other financing sources will ask. These questions will be targeted at how they are getting their money back, how much they are getting in returns, how will their investment be secured, etc.
Private money investors can be anyone from family and friends, to people who have extra money to invest without letting their money sit around in the bank. People with IRA’s, Super funds, 401k plans, and other retirement accounts are perfect private money targets.
You can find these lenders by talking to everyone you know, running newspaper ads, and sending out direct mail. Eventually, you will get referrals from these investors because you will make them so much money.
There are some differences between a private money lender and a hard money lender.
For example, with private money you don’t have to pay points and pre-payment penalties. With some hard money lenders you have to be careful because they will charge a pre-payment penalty. With Private money you can truly get a deal with no money and no credit.
Nowadays, most hard money lenders require a minimum credit score and financial docs. With a lot of hard money lenders, you still need to come with a down payment or rehab money. Private money investors fund the entire deal. I can go on and on comparing the two, but I think you get the picture.
I’m not trying to bash hard money lenders at all. In fact, I use hard money from time to time. What I am saying is that private money investors offer a great deal of control and freedom on your deals and I would highly recommend using them.
I believe that if you are truly interested in stepping your real estate game up, then you need to work with private money investors. It is by far the easiest way to get financing for your real estate deals.
Create a video blog…instantly.
Using private money investors can be a real gem in your real estate business. There are many benefits to using private money as opposed to bank financing, hard money, lines of credit, and other forms of financing.
I have been using private money since I started in the real estate business. If I didn’t have private money investors, I wouldn’t know where my business would be right now. With private money investors there are no credit checks, no financial information given, and no monthly payments if you structure the deal right. No questions asked.
Grant it, in the beginning you will have to answer some questions before someone sends you a check for $500,000. But the questions will be nothing compared to what other financing sources will ask. These questions will be targeted at how they are getting their money back, how much they are getting in returns, how will their investment be secured, etc.
Private money investors can be anyone from family and friends, to people who have extra money to invest without letting their money sit around in the bank. People with IRA’s, Super funds, 401k plans, and other retirement accounts are perfect private money targets.
You can find these lenders by talking to everyone you know, running newspaper ads, and sending out direct mail. Eventually, you will get referrals from these investors because you will make them so much money.
There are some differences between a private money lender and a hard money lender.
For example, with private money you don’t have to pay points and pre-payment penalties. With some hard money lenders you have to be careful because they will charge a pre-payment penalty. With Private money you can truly get a deal with no money and no credit.
Nowadays, most hard money lenders require a minimum credit score and financial docs. With a lot of hard money lenders, you still need to come with a down payment or rehab money. Private money investors fund the entire deal. I can go on and on comparing the two, but I think you get the picture.
I’m not trying to bash hard money lenders at all. In fact, I use hard money from time to time. What I am saying is that private money investors offer a great deal of control and freedom on your deals and I would highly recommend using them.
I believe that if you are truly interested in stepping your real estate game up, then you need to work with private money investors. It is by far the easiest way to get financing for your real estate deals.
Create a video blog…instantly.
