Introduction
A Private lender is the single most important person in your real
estate investment business. Why? Well, a couple of years ago, you
may have been able to get relatively inexpensive loans from your local
bank or saving & loan. But those days are gone as traditional
lenders are tightening lending practices and, in some case, have gone
out of business.
As a real estate investor you need access to cash that is both
affordable and readily available when a good deal presents
itself. Instead of looking for money from banks, saving &
loans or even hard money lenders who charge high rates of interest,
huge fees and two month closings why not consider private lenders as a
far better alternative.
Who Are Private Lenders?
Private lenders come from all walks of life and may not know the first
thing about the real estate business, but have extra cash or assets
that they can invest. These individuals are generally
middle class people, who have some extra funds to lend. They can
be retired business people, corporate executives, professionals such as
doctors, lawyers, or business owners or even blue collar
workers.
Private
lenders are looking for returns substantially above the 3% to 5% they
get at the bank with CD’s or money markets. Most private
lenders are looking for investment returns in the 9% to 15% range and
secured by local rental real estate.
So
the concept of "private lending" can be defined as the process of
borrowing real estate investment funds from private individuals at
rates higher than these lenders can normally achieve using conventional
investing institutions like banks and conventional investment vehicles
like stocks, bonds, CDs, or money markets and secured by local rental
real estate.
Do Private Lenders Come in Different Forms
Private lenders generally come in two forms. First mortgage lenders will
lend up to 90% to 95% of the purchase price and expect you to fund the
balance or use another private lender to fund the balance.
Or second mortgage lenders
who will lend you the 20% to 30% down payment you need after you have
arranged a bank loan for the first 70% to 80% of the purchase price.
Download
your FREE eBook titled "Discover the
Secrets of How to Fund Your Real Estate Deals with Private Lenders" and
learn how to fund your real estate deals with Private lenders!
|