1. Private lenders for real estate are offering competitive interest rates
Since a loan on an investment property is secured by a recorded Deed of Trust, private lenders can offer interest rates that are competitive with the open market.
Additionally, since private lenders for real estate are looking for investment properties, they are more likely to offer these rates on properties without a current cash flow than traditional banks, which are still restricting lending.
2. Private Money loans are faster and more flexible than other loans options
Since private lenders use the same investing principles as you do, they can make a quick decision, allowing you to avoid the long process of traditional bank underwriting.
3. Private lenders’ debt service coverage ratio is less strict
Since private lenders do not have the same underwriting process as traditional loan servicing arrangements, they have more flexibility to look at other factors influencing loan repayment.
4. Offer shorter terms
Working with private money lenders offer shorter terms to allow you to secure the property, avoid prepayment penalties, and look to traditional financing once the property is stabilized if necessary.
5. Real estate provides you better access to loans
While keeping traditional loan benefits. With private loans, you still have the same protections as with traditional bank loans, but are able to take advantage of a hard money loan process that moves more quickly and is inherently more flexible than conventional permanent financing.
6. It is less frequent for private loans to be packaged and resold
For real estate, they look specifically at you and your property to make an investment decision, and once they have found a good risk they are unlikely to sell their investment. This allows you a measure of confidence which you will still be doing business with the same partners for the life of a loan.
Even though cash buyers are a great resource for funding and buying real estate, Private Lenders are able to provide investment resources above and beyond what a typical cash buyers may be able to provide.
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