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Who is a Private Lender in Real Estate

6/29/2024

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This article is a continuation in a series about Real Estate Private lending.

A private lender can be anyone with capital willing to invest in real estate. This includes friends and family with substantial savings, retirees with a nest egg, or high-income professionals like doctors and CEOs. Ideally, they should be somewhat knowledgeable about real estate as an alternative investment.

Real Estate Investors often meet private lenders at local real estate investment associations (REIAs).

Terms with private lenders can vary, but as real estate investors gain experience, they can negotiate better rates. Private lenders offer flexibility and can fund deals quickly, making them an attractive option for real estate investors.

To learn more about Who is a Private Lenders in Real Estate
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Why Would Real Estate Investors use a Private Lender instead of a Bank

6/22/2024

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This article is a continuation in a series about Real Estate Private lending.  

Real estate investors might choose private lenders over traditional banks for several reasons:

  1. Flexibility and Speed: Private lenders can close deals much faster, often within a week, whereas banks may take 30-60 days.
  2. Less Bureaucracy: Fewer paperwork and no need for appraisals make the process smoother.
  3. Lower Down Payments: Private lenders often require lower down payments (as low as 5-10%) compared to banks (20-30%).
  4. Full Funding: Private lenders can finance the entire deal, including rehab costs, based on the property's value, offering more flexibility in payments and use of funds.

To learn more about why would a real estate investor use a private lender instead of a bank... 

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Why Would Someone be a real estate Private Lender

6/18/2024

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This is a start of a series of articles that I will answer a question I receive all the time... “How Does Private Lending Work”.

People might want to become private lenders in real estate for several reasons. One common reason is the desire for alternative investments beyond traditional assets like stocks and bonds. Some individuals, especially those with a substantial retirement nest egg, seek diversification to reduce risk and increase returns. Real estate-backed loans can offer attractive returns, such as 10% on short-term fix-and-flip projects or other real estate ventures.
Another group includes younger, high-earning professionals who are accumulating wealth and want to diversify their investments beyond stocks. These individuals often have disposable income and seek opportunities to invest their cash reserves.
Additionally, business owners with significant savings may prefer investing in real estate to protect against inflation, which can erode cash value in savings accounts. These busy professionals may lack the time to manage their investments actively and find private lending a suitable and relatively safe option.
Overall, private lending appeals to those looking for diversification, higher returns, and a hedge against inflation, offering a way to grow their wealth securely through real estate-backed investments.

To learn more...WHY WOULD SOMEONE BE A REAL ESTATE PRIVATE LENDER
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What is Private Lending

6/2/2024

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This is a start of a series of articles that I will answer a question I receive all the time... “How Does Private Lending Work”.

What is Private Lending?

Private lending involves individuals, rather than institutions, providing loans. It serves as an alternative to traditional bank financing, especially useful for real estate investors looking to buy, renovate, and refinance properties.

Traditional banks often require lengthy applications and appraisals, and they prefer properties that are already in good condition.

Why Use Private Lending?
  • Speed and Flexibility: Private lenders can offer quicker access to funds without the extensive paperwork required by banks.
  • Scaling Investments: Investors can scale their operations beyond their personal funds.
  • Higher Returns for Lenders: Private lenders seek higher returns (7-10%) compared to typical bank interest rates (2-3%). They prefer safer investments, like real estate, over volatile stock markets.

Types of Financing:
  • Traditional Bank Loans: Require extensive documentation, appraisals, and are suitable for properties in good condition.
  • Asset-Based Lending: Less documentation but requires a proven track record.
  • Private Lending: Offers the most flexibility and is ideal for real estate investors.

Private lenders can be found within your network, including friends, family, and acquaintances. We'll dive deeper into finding and working with private lenders in future articles.

For more detailed explanations and answers to your questions please see this video.
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    Paul & Michael

    We buy and sell real estate virtually all over the United States! 

    We will cover virtual wholesaling, virtual rentals (out of state), renovation projects, owner financing, private lending, and more. 

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