As banks make it increasingly hard to obtain real estate investment loans, investors are turning to private money loans to bridge the gap.
A private money loan comes from a rather than a bank. The money is often available in days instead of weeks, with less-strict requirements for credit history. Private loans enable cash offers with less hassle. Ultimately, they streamline the real estate investing business, giving investors a powerful tool to act on profit-making opportunities.
A private money loan is a type of financing real estate investors seek for fix-and-flip or long term rental properties. The cash comes from a private company and is geared more toward the real estate investor.
Investors often prefer private money loans for a number of reasons, including:
Ease of entry. Private money loans take things like credit score, income and cash-on-hand into account, but not as strictly as a bank loan does.
Cash offers. Private money loans enable up to 90% cash offers. That’s a huge bargaining chip when buying real estate.
Less hassle. Bank loans add a lot of red tape and paperwork. Private money loans make real estate investment easier by cutting down the paperwork significantly.
·Multiple Simultaneous Deals. Private money loans let investors act on several deals at once, removing the loan-quantity barriers that banks place on investors, thereby preventing them from scaling their businesses.
What Kinds of Properties Does a Private Money Loan Cover?
Generally speaking, private money loans for traditional family real estate deals. Anyone looking to buy a family home with good credit and a solid income history should go the traditional route.
Private money loans are ideal for:
·Rental properties. These are ideal for private money loans because they often show definite profit potential that attracts investors.
· Fix and flipsTime is money with fix and flips. That’s why private loans beat traditional bank financing when it comes to these deals.
· . The demonstrable income stream from multi-family homes makes them excellent candidates for private money loans.
Single family homes. Where the buyer has credit issues or needs to act fast, speed is the best feature of private money.
Fast real estate deals. The fast turnaround of private money loans makes them ideal for deals that pop up quickly like bank foreclosures and short sales.
Private Money Loans: How Much Do They Cover?
That depends on the lender, but generally a private loan covers some percentage of the total value based on cost, value or after-repair-value (ARV).
·Loan To Cost (LTC). Some private lenders cover 70% to 90% of a property’s purchase price.
Loan to Value (LTV). Some private money loans cover up to 90% of the property’s estimated value.
· After Repair Value (ARV).
LendingOne is a direct private real estate lender specializing in fix-n-flip and rental loans for investors. We offer the fast closings, low rates, and competitive loan terms investors will need to scale their businesses. Apply today for a or our 30-Year Fixed-Rate Rental Loan.