Private Money

There are many reasons to look into private money loans. Real estate investing is one of the most common uses of private money funds. In order to take advantage of ongoing projects, investors often require more operating capital than conventional banks are prepared to provide on short notice.

These days, with so many restrictions on bank financing, private money can be an excellent option. If you are a real estate investor, you can be turned down for a bank loan simply because of how many properties you own! Additionally, the properties that can be purchased below market price may not meet conventional lending criteria. In either case, private money lenders are not restricted in the same way that conventional banks are and can provide quicker liquidity and more flexibility than banks are willing to show these days.

Private money lenders can often fund very quickly, and can work with borrowers with unique scenarios. Mortgages for real estate investing can take up to 90 days or more to be completed by conventional banks, and that is if they are willing to fund at all. Private money lenders can generally fund within two-three weeks, sometimes quicker.

Private lenders can also fund projects that conventional banks cannot. If you are a real estate investor looking to purchase unique property types such as assisted living facilities (one of the hottest markets these days), strip malls (in the market today, strip malls can be tough to finance with banks), gas stations or other "out of the box" properties, an institutional loan may simply not be an option. Private money loans can often come to the rescue to help finance these types of transactions.

The best way to work with private money is to use it as a bridge loan. Terms generally range from one to three years, and maintaining a game plan for your exit strategy is an important aspect of making good use of private money.