Private Money: How to Grow your Biz in Any Economy
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 market has opened the doors for a new breed of loans called transactional funding, which is normally used to fund short sales, and private money, which is similar to hard money. Private money loans are preferable to most investors because the terms are generous and the investor has more control over the deal.
Private money can be raised in many ways - brokers may pool the funds, or wealthy individuals may provide your funds. The erratic moves in the stock market and global capital markets has made many investors running for more secure places to put their money.
Think about it from the private money lenders perspective. Where do you think he would rather put his money? In the stock market, which has been more erratic than any time in recent history, or an investor that's purchasing incredibly low risk real estate investments that have 30% + equity and, by the way, is secured by the property? No need to guess which option makes more sense. That's exactly why many real estate investors are having such success these days getting private money sources.
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. - 23162
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 market has opened the doors for a new breed of loans called transactional funding, which is normally used to fund short sales, and private money, which is similar to hard money. Private money loans are preferable to most investors because the terms are generous and the investor has more control over the deal.
Private money can be raised in many ways - brokers may pool the funds, or wealthy individuals may provide your funds. The erratic moves in the stock market and global capital markets has made many investors running for more secure places to put their money.
Think about it from the private money lenders perspective. Where do you think he would rather put his money? In the stock market, which has been more erratic than any time in recent history, or an investor that's purchasing incredibly low risk real estate investments that have 30% + equity and, by the way, is secured by the property? No need to guess which option makes more sense. That's exactly why many real estate investors are having such success these days getting private money sources.
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. - 23162
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. Come visit his website Private Money Blueprint Review to get 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 @ 3:35 AM
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