Private Money is the Secret to Success
The most frequent excuse people use for not getting involved in real estate investing, other than fear of failing, is lack of financing. In reality, it has really not been easier or more attractive than now to invest in real estate. Previously, the only options around for private money loans were financing through banks or high interest loans made available by hard money lenders. However, banks often require a substantial down payment, usually 20%, a ton of paperwork, and a daunting underwriting process that has kills many a deal.
The alternative has been to use hard money loans, however rates are typically sky high, which means the transaction must have substantial margin for the investor. As we already know, lending is not nearly as accessible as it has been in the past, but the credit markets do show signs of improvement. Banks that are open to lending money today are requiring a hefty down payment and excellent credit from the borrow. Moreover, it seems hard money lenders are charging exorbitant rates because they're aware that borrowers have limited options.
While the current economic downturn has created issues with investors, it also offers outstanding investment opportunities for those who recognize this. This market has opened the doors for a new breed of loans called transactional funding, which is normally used to fund short sales, and private money, which is similar to hard money. Private money loans are preferable to most investors because the terms are generous and the investor has more control over the deal.
There are a number of ways to raise private money for deals - wealthy individuals, pooled funds, brokers, etc. The erratic moves in the stock market and global capital markets has made many investors running for more secure places to put their money.
Keep in mind the perspective the private money lenders may have. Consider where the investor would rather invest his money...in the stock market which has lost almost as much as during the great depression, or in a local property investment that will be secured by the equity in the home? Seem like a no brainer, doesn't it? That's exactly why many real estate investors are having such success these days getting private money sources.
While banks will eventually open their doors and begin lending again, private money lenders offer a new breed of lending that's probably going to stay around. - 23167
The alternative has been to use hard money loans, however rates are typically sky high, which means the transaction must have substantial margin for the investor. As we already know, lending is not nearly as accessible as it has been in the past, but the credit markets do show signs of improvement. Banks that are open to lending money today are requiring a hefty down payment and excellent credit from the borrow. Moreover, it seems hard money lenders are charging exorbitant rates because they're aware that borrowers have limited options.
While the current economic downturn has created issues with investors, it also offers outstanding investment opportunities for those who recognize this. This market has opened the doors for a new breed of loans called transactional funding, which is normally used to fund short sales, and private money, which is similar to hard money. Private money loans are preferable to most investors because the terms are generous and the investor has more control over the deal.
There are a number of ways to raise private money for deals - wealthy individuals, pooled funds, brokers, etc. The erratic moves in the stock market and global capital markets has made many investors running for more secure places to put their money.
Keep in mind the perspective the private money lenders may have. Consider where the investor would rather invest his money...in the stock market which has lost almost as much as during the great depression, or in a local property investment that will be secured by the equity in the home? Seem like a no brainer, doesn't it? That's exactly why many real estate investors are having such success these days getting private money sources.
While banks will eventually open their doors and begin lending again, private money lenders offer a new breed of lending that's probably going to stay around. - 23167
About the Author:
Steve Jacobsen is a real estate investor and realtor focused on investment properties and has closed well over 100 transactions during his investing career. Visit his website Private Money Blueprint Review to get more information about how to obtain private money loans and get yourself on the road to where you want to be...starting right now.
posted by X - Men @ 3:26 AM
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