Private Money is a Must for Investors
The most frequent excuse people use for not getting involved in real estate investing, other than fear of failing, is lack of financing. The fact is it has never been easier, or more lucrative, to invest in real estate than right now. In times past, the options for private money loans were limited to conventional loans through banks or high interest loans through hard money lenders. However, the banks require a hefty down payment (20% for an investment property), a mountain of paperwork, and an underwriting process thats sure to kill your deal one way or another.
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 new environment has led to the creation of transactional funding, which is frequently used to fund short sales, and private money loans, which is typically provided by individuals. Private money is the most advantageous option for many investors because the investor controls 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. Where do you believe he would prefer to place his money...in the stock market, which has been incredibly volatile, or a local property investment that would have substantial equity? No need to guess which option makes more sense. That's primarily why investors are successful in getting private money to fund their deals.
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. - 23212
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 new environment has led to the creation of transactional funding, which is frequently used to fund short sales, and private money loans, which is typically provided by individuals. Private money is the most advantageous option for many investors because the investor controls 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. Where do you believe he would prefer to place his money...in the stock market, which has been incredibly volatile, or a local property investment that would have substantial equity? No need to guess which option makes more sense. That's primarily why investors are successful in getting private money to fund their deals.
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. - 23212
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 discover more information about how to acquire private money loans and get yourself on the road to where you want to be...starting now.
posted by X - Men @ 5:29 AM
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