To be a successful real estate investor, you need to be creative. Thinking outside the box pays big time when it comes to real estate deals. To make your name and some profit along with it, you need to have ample financial backing. Banks and lenders that are more traditional might not be always willing to finance your real estate endeavors. If you land a sweet deal that you know is a goldmine you need money as fast as you can get before someone else grabs it.
However, if a mortgage broker fails to recognize the potential of the property or if you are financially unfit to forward you a loan, you are stuck. A private money lender can come to the rescue in this situation because they have a unique loan. Let us go through some of the most notable benefits of using private money for real estate investment.
If you have asked any of your friends or family members for a private loan, you most definitely do not need to prove your financial dependability by letting them harshly and meticulously scrutinize your credit score as well as your FICO score. If you are dealing with a business that specializes in offering private money for real estate deals, they are more than likely to rely on their experience in judging a good real estate deal to accept your loan request. So, if your credit score is 600, no need to waste your time finding a bank to get a loan, contact a private lender and go ahead with your deal.
Getting a loan from a financial institution is a step-by-step process. Getting pre-qualified and pre-approved, submitting myriad financial documents and then waiting for mortgage deal to finalize is not the best way to approach any real estate deal. Private lenders save you important time, and when it comes to real estate, time really is money. If you have been able to find a lender who trusts you and has confidence in the prospective deal you can get money in no time. You do not have to wait 45 or 60 days to close the deal.
Since the process of securing a loan from a private lender takes considerably less time you can take make the all-important cash offers within days and avail the much-needed discount. While the other investors are busy going through their pre-approval, you have the opportunity to close the deal. It makes great sense to be a little bold, take some risks, and get private money for real estate when you see a deal you like and a discount offer that is irresistible.
Just because you are getting a loan from a private moneylender, does not mean the deal or transaction is not backed by legal assurances. One of the main reasons many people shy away from the private lenders is the doubts they have regarding security. A hard money loan forwarded by a private lender is backed by real estate as collateral. It is a serious financial contract that checks all the boxes when it comes to security for both parties involved. The flexible and quick nature of this process is its added advantage.
Most private moneylenders are on the lookout for smart real estate investors. They will be more than happy to forward a loan to you at market-competitive interest rates without much fuss. More often than not you will be able to secure a private loan at lower interest rates than other lending institutions. If you have contacted a friend for a private loan, you can set the terms of the deals including interest rates yourself.
The flexible nature of private money for real estate deals is why it is becoming increasingly popular with real estate investors.