What Is A Private Money Lender? Be sure to subscribe to her YouTube channel for all your real estate tips, home tours and advice.
If you’re looking to invest in real estate or are currently a real estate investors, then you understand that private money lenders are essential to having the ability to purchase multiple real estate properties at any given time.
Although you can invest in real estate with a mortgage, experienced investors know that getting a traditional mortgage isn’t usually the best way to get capital to fund your real estate investment deals.
Here are some of the ways:
- Borrower Requirements: One major reason is because of the requirements of the borrower is less of a concern for a private money lender than a mortgage lender. There’s often no credit requirement in order to get approved. The private money lender cares more about how good the deal is than the individual’s credit score and report. Yet, the better the credit score and the better the deal, the better the terms often for the borrower with private money lending.
- Timeline of Closing: Depending on the deal, the private money lender can often close much faster on the loan than a traditional mortgage. This will often depend on the deal and the private money lender you are using but sometimes in as fast as 7 days!
- Repayment of Loan: A private money lender will have more flexible repayment loans that often are only interest payments instead of principal, interest, taxes and insurance payments that are combined with a traditional mortgage payment. Then the loan is repaid in full when the investor sells the property.o
- Renovation Funding Costs: A private money lender will often fund not only most if not all of the costs to acquire the property but also the costs to rehab the property. A traditional mortgage company that offers home renovation loans are looking for borrowers that intend to live in the home when the work is completed vs. a private money lender is looking for borrowers that have no intention of living in the home.
- No Pre-Payment Penalty: Private money lenders often don’t have a pre-payment penalty to repay the loan early which is great because when investing in a property that you intend to flip, you want to sell the home as soon as possible and repay the loan at that time as well, while a traditional mortgage may have a pre-payment penalty if you re-pay the loan too early.
Designed Living Real Estate currently does private money lending under Designed Living Funding. Whether you’re currently working on a deal right now or just have questions in regards to what to expect from us when you do have a deal, be sure to reach out to Patrice at (248) 780-2521.