Getting Private Money Lenders
If you have been thinking about investing in real estate, you may have noticed that it’s not as easy as it used to be to get a bank loan to buy properties.
Banks impose limitations on how many properties you can hold, they also require hefty down payments and certain standards on the condition of the property, and if you are self employed and can’t proof employment or income with tax returns, you’re probably out of luck going that route.
What are the alternatives?
There are so called “hard money lenders”. They are essentially companies who will loan money on investment properties while they are being repaired. Most of these types of loans are short-term, and have to be paid back either by selling the house to a qualified buyer who brings in a new loan, or by refinancing (which can put you back in the same problem cycle as with bank loans above.)
Plus, hard money lenders usually charge very high interest rates and fees which can diminish or even eradicate your profits altogether.
Getting Private Money Lenders for real estate is another option, and it has many advantages:
- Low or no loan origination fees
- Relatively low interest rates
- Flexible terms (some private money lenders will make long term loans)
- Flexible payment terms (you can defer interest payments)
- Easy loan conditions (you can borrow enough money to cover ALL your expenses plus contingencies)
But how do you go about getting private money lenders for real estate?
Three things are important when you talk to friends, family and other possible prospects:
- Observe SEC rules and never “guarantee” anything
- Show how the property is used as asset to secure the investment
- Demonstrate your ability and credibility in completing the deal and returning the principal with a good return
Here is a link to a sample “presentation” that you can use when you meet with potential private money lenders.