If you are a real estate investor in search of capital and you are frustrated with banks and hard money lenders you may find borrowing from people through private lending a much better option. This type of lending really attracts many real estate investors as the advantages of private lending over banks and hard money lending includes faster turnaround and no personal credit checks.
Private lending involves borrowing from people, not banks or hard money lenders, for the purpose of purchasing real estate investments with the pledge of the real estate as a security for the loan. This is one of the best ways for real estate investors to preserve their cash and tap into the leverage of other people’s money.
You need to have a fair amount of knowledge about private lending before using this type of borrowing. You need to make all the necessary preparations with regards to the deal and make sure you are buying at the right price to achieve success. In this type of lending, private lenders may invest their money in other options, so to attract private lenders you must be offering safe and secure investment at high interest rates.
Private lending allows you, the real estate investor, to control the terms and conditions that you borrow money at from private lenders. You can go for short terms loans of less than one year or as long as ten years depending on your goals and plans for each piece of real estate you purchase. You can also pay different rates of interest depending on a number of factors including how much they borrow and for how long. The important point is you control how the deal works not a bank or hard money lender.
Private lending offers the lenders the freedom to increase or decrease the size of their investment in order to suit their needs and comfort level. In other words, there are lots of private lenders out there looking to make high interest loans secured by real estate and you just need to go find them and start borrowing to buy real estate.