Your Team Lender

Posts Tagged ‘Private Lenders’

Although conventional lending institutions have long been considered the popular choice for obtaining a property mortgage, the increasingly fast paced environment has prompted real estate investors to turn to private mortgage lenders to fund their property ventures. This is due in part to the snags and red tape in the convention mortgage lending process and the increased competition in the global real estate marketplace.

Connecting with private mortgage organization that can sometimes be tricky due to private lending being integrated with conventional lending institutions when it comes to the advertising industry. On the flip side of the coin, some private lenders are also conservative about advertising due to probable issues with the SEC on the state and federal levels.

So, how do you cut to the chase and connect with a private mortgage lenders who will finance your next property venture?

Locate a Private Mortgage Lender: Private mortgage lenders are potentially all around you. They reside in your community, they may live in your neighborhood, you may find them through investor associations, perhaps they advertise, or maybe some of your friends can refer you to someone they know. The bottom line is if you look around you, private lenders are virtually everywhere.

Marketing Strategy: Connecting with a private mortgage lender requires a marketing strategy on the part of the borrower. You will need a networking strategy to locate potential private lenders and then you will need a marketing plan as well as a business plan.

Your audience will be private mortgage lenders that are interested in earning a high interest rate on their investment which will be secured by real property along with a loan-to-value ratio that does not exceed 75 percent.

You can choose to market your venture by inviting a group of potential private lenders to a presentation that you have prepared, that pitches the real estate venture to your potential investors or you can opt for other marketing strategies. Other strategies could include advertising high interest on investments, circulating your business card, networking with other real estate investors, mailing information, or locating prospects by word of mouth.

Use Multiple Lenders: As you make connections with private lenders, keep in mind that you may use more than one lender to finance a single real estate venture. In some instances, one lender may be unable to fund the entire deal. In this case you can negotiate one private lender to fund the first mortgage and the other lenders may act as second mortgage holders.

Whatever route you take to connect yourself with a private lender, creativity in marketing and offering your investors a better rate of return, are the keys that open the door to an endless array of real estate investment opportunities.

Hard money lenders have always been the reprieve of real estate investors who want to close a deal but are short of funds. Sometimes, investors still use this kind of financing even they already have money. Before you call those investors crazy, read on about hard money lenders. Here some of the basics that you should know about them.

They are easier to convince compared to banks and traditional lenders. People have called hard money financing “easy access to credit” and why not. Because hard money lenders, who are also known as private lenders, usually work on their own, you won’t have to convince a lot of people to get your loan approved. If the lender says yes to you, then that’s it; No more approval of other personnel and office superiors. Conventional lenders usually need the nod from a certain number of personnel before they release loans.

One reason why private lenders do not take long in processing loan applications is because they use a different system when evaluating borrowers. If traditional lenders look at your creditworthiness based on you credit score, private lenders care about the deal you are presenting. They want to know what deal you want to close using their money and if you will be able to repay them wit the profit you’ll get from this deal. For instance, if you want to rehab a property, they will assess whether that house indeed has a potential to yield profit. They will look at how you plan to transform an old house into a new home. If they see that you will be able to repay the money through that deal, then they will finance it.

Because of this system, hard money lenders are more exposed to risks of defaults. Add to this the fact that they lend money even to those who have poor credit scores. As mentioned earlier, private lenders care about the deal borrowers present and not about their current income or other proofs of creditworthiness. That is why they use a higher interest rate compared to traditional lenders. If banks are stringent in screening loan applicants to ensure their survival, the high interest is private lenders’ way of keeping their business running. Rates vary depending on location but an 18% interest is common.

Read articles and watch videos about hard money lenders online at rehab-real-estate.com and discover more information about these lenders.

One fear that many new Real Estate Investors have is where to find money for real estate investing. And once new Real Estate Investors begin to read about some of the options they may have, they are bound to come across the term “Hard Money Lender”. So, what is a Hard Money Lender (HML)?

A Hard Money Lender is a private individual or small company of private lenders who are usually locally based in the area where the real estate is being purchased. Hard Money Lenders often look at a potential real estate deal when deciding whether or not to make a loan on a particular property. Unlike traditional banks or lenders, they are generally not as concerned with a particular person’s financial background, situation, or credit. The property is the direct collateral for the loan.

Hard Money Lenders often charge a hefty premium to lend money, meaning several points more and a very high interest rate for each loan; many real estate investors do not use HMLs because of this. Many Hard Money Lenders can turn around a loan (meaning you can have money in hand) within 24 hours.

Sometimes Hard Money Lenders are used in addition to regular or traditional funding. Other times Investors utilize Hard Money as his or her only means of funding.

When considering whether or not to use hard money, you have to calculate your numbers to decide if this is something that is worth it to you. If you need money within two days and will gross $40,000 when all is said and done, does it really matter if you have to pay $10,000 for the money? Or is it just part of the costs of doing business? Only you can determine this.

What is the best way to find Hard Money Lenders?

The best way to find a Hard Money Lender is to talk to people who are already working with them. The simplest way to do that is to ask other active investors. Find other investors by attending REIA meetings. Another great way to find other investors is to go to foreclosure auctions. See who is bidding on which properties, bring business cards and strike up a conversation. Ask them where they are getting the money and go to the same person or place.

You can also check with:

1. Attorneys and/or title companies (that handle closings for other investors)

2. Real Estate Brokers (that work with investors)

3. Bank Officers (small, local banks that are portfolio lenders, lenders who keep the loans “in house”)

To find a Hard Money Lender, you need to tell everyone you know that you are a Real Estate Investor. You need to build a team and you need to network with other investors. Often times if the numbers on the deal are solid (”guaranteed” profitable), finding the money should not be a problem (especially when you have surrounded yourself with a network).

Finally, when Investing in Real Estate, it is important to weigh all of your financing options against all of your proposed exit strategies. Real Estate Investors who consider all of the pros and cons of a potential deal will have a much easier time knowing where to find the money that they need.