subject: Why Use Private Money To Buy Investment Properties [print this page] As we all know, having a stable cash flow is important for a real estate investor. Having access to a great source of funds enables him to grab more opportunities to make money in the housing business. In addition, it helps ensure the completion of a particular real estate project.
Fortunately, real estate investors can always rely on lenders of private money. As the name implies, private money lenders are private individuals or organizations that offer financing in exchange for profit. The type of financing they are offering is asset-based and borrowing money from these non-traditional financiers is relatively easier than obtaining funds from banks and other conventional lending institutions.
If you are looking for a way to finance a real estate project, here are some of the reasons why you should consider using private money:
Because private money is asset-based, a real estate investor can still obtain the funds that he needs regardless of his credit rating. As long the property can fetch a huge price after it has been repaired, then the lender will most approve his loan application.
A borrower can save more time since he doesnt have to prepare documents proving his creditworthiness. In addition, he doesnt have to wait weeks or months just to determine the result of his loan application as most private lenders can verify a loans eligibility in just a matter of days.
One of the biggest advantages of private money lending is that it gives the borrower more control. Unlike when dealing with banks, mortgage companies, or even money lenders, an investor can negotiate the terms of his loan. Thus, he can ask the private lenders to create terms that wont place a huge burden on his financial capabilities.
At times, private money lenders will provide 100% financing on some deals. Many of them will even agree to shoulder a collateralized propertys repair cost. Thus, you can rake in big profits without spending your own money up front.
Using private money to buy investment properties enables real estate investors to protect their credit rating. Any transaction made with a private money lender will not be reported to the credit bureau. Thus, using private money to buy investment properties wont affect your debt-to-income ratio.
