Private Money is the Secret to Success

By Steve Jacobsen

The most frequent excuse people use for not getting involved in real estate investing, other than fear of failing, is lack of financing. In reality, it has really not been easier or more attractive than now to invest in real estate. Previously, the only options around for private money loans were financing through banks or high interest loans made available by hard money lenders. However, banks often require a substantial down payment, usually 20%, a ton of paperwork, and a daunting underwriting process that has kills many a deal.

The other option has been hard money lenders, however the rates are usually exorbitant, which means the deals had to have a huge margin to make any sense. 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. Lenders that are willing to lend money today typically require significant equity from the borrower and outstanding credit. Moreover, it seems hard money lenders are charging exorbitant rates because they're aware that borrowers have limited options.

While the current economic environment has created challenges for investors, it also presents tremendous opportunities for those who recognize this and are willing to find solutions such as private money loans. 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 is the most advantageous option for many investors because the investor controls 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.

Keep in mind the perspective the private money lenders may have. Where do you believe he would prefer to place his money...in the stock market, which has been incredibly volatile, or a local property investment that would have substantial equity? No need to guess which option makes more sense. That's primarily why investors are successful in getting private money to fund their deals.

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. - 23196

About the Author:

Steve Jacobsen is a real estate investor and realtor with a focus on investment properties and has closed well over 100 transactions during his investing career. Visit his website Private Money Blueprint Review to get more information about how to acquire private money loans and put yourself on the path to where you want to be...starting now.