subject: When Do You Need Private Money Lending [print this page] Private money lending is probably the most flexible type of financing you'll ever get for your real estate investments. Unlike traditional bank loans, you can use private money however and wherever you want. In this type of financing, there are no certain restrictions that can put a damper on how you make money in real estate, which is why if you're in need of cash for you investment properties, you've got to consider securing private loans.
Basically, private money is a type of financing offered by private individuals and small lending companies. It is mostly asset-based, meaning a private money lender relies on the value of the property offered as collateral to verify a loan's eligibility. For an investor, securing this type of financing can give him a definite advantage when investing in real estate. Here are some of the common uses of private money loans:
When flipping or rehabbing homes. As you may know, banks, mortgages companies, and credit unions don't usually lend money for the purchase of a dilapidated property because they want don't want to be saddles with a deadbeat property in case a borrower defaults on his loan. With private money lending, however, you can secure the financing you need to buy a handyman special since what's important for the lender is the value of the property once it has been repaired and renovated, not its current worth.
When wholesaling bank owned homes or REOs. One of the challenges in wholesaling properties owned by banks and lenders is that you cannot easily assign the contracts of REOs unlike conventional single-family homes. This is the reason why most investors use double closings, wherein the investor buys the property from the bank before selling it to an end buyer, to close deals. If you want to use double closing but you don't have enough cash to buy the property from the bank, you can use private money as transactional funding.
When making real estate investments with a bad credit. As long as the he is borrowing funds for a property with high profitability and marketability, a real estate investor can obtain the assistance of private money lenders regardless of his credit rating.
Private money lending is indeed a great help for cash-strapped real estate investors. If you want to know where you can find a good source of private money, log on to www.RehabHardMoney.com. The website can hook you up with a reliable lender wherever you are in the U.S.
When Do You Need Private Money Lending
By: Hazel Wright
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