Private Money Investors | Private Money Grants

You can find private money investors in some of the most unlikely places.

Many private money lenders are not really lenders at all.  Some people do not even know they are in the market to lend money.  You can find these loans by telling a lot of people what you are doing.  A lot of people have money they are moving around between different investments like, CD’S, and money market accounts.  They are always looking for a better place to invest their funds.

Real estate is a great investment but a lot of people lack the time or knowledge to get involved.  These are the people that are perfect candidates for private money loans.  You are providing them with a way to get involved in real estate without them having to invest their time.  You do not have to “sell” them your idea.  Just tell them what you are doing and ask them if they know anyone who might be interested.

Busy professionals have the money to invest, just not the time to manage their own deals.  The best way to find private people who are may be interested in lending you money is by networking.  A person hearing your ideas may just offer to lend you some money.

If you find a friend or family member to lend you  money, you will not have to go through the hassle of a credit check.  They are likely to know you, and know you are a good investment.  Start letting people know of your investment plans, you may be surprised at just how many people will want to lend you money.

There are simple criteria when using a private hard money lender.  There are some things you need to make sure you do, and some things you want to avoid.

With a private hard money lender you do not have to go through a credit check.  Money is available quickly.  You will have a higher interest rate (10%-15% is normal).

What you want to DO:
Shop around.  There are a lot of private lenders out there.  Find an honest lender that has the lowest fee.  Since there is no credit check, you do not have to worry about your credit score being affected.

Get a breakdown of all the fees.  Some lenders will not tell you in advance what the lending fees will be.  Ask for every single fee you may incur.  Typical fees include: evaluation fee, notary fee, and loan origination fees.

Ask about the terms of the loan.  Terms are flexible, but you need to know what the fee for renewing the mortgage will be when the term ends.  Most private lending terms range from 3 months to 5 years.

Ask about the prepayment penalties.  Some lenders will charge you prepayment penalties.  If you sign up for a 1 year mortgage, you are responsible for paying the interest the entire year.  Other lenders will be more flexible and not make you responsible for the entire term’s worth of interest.

What you DO NOT want to do:
Contact private lenders if you are leveraged more than 75% of the value of your property.  Private lenders, lend you money on the equity of your property.

Pay any kind of upfront fees.  Lenders that require an upfront fee tend not to deliver on their promise of a loan.  Normally fees are paid at the time of closing.  If you are asked to pay a fee upfront it may be fraud.

Never make false statements about your situation.  Being honest with the lender no matter how embarrassing your situation may be presents you in a better light to the lender.  They are giving you the loan based on the value of your property.  Giving false information is a good way to get the lender to back out of the loan.

You will find borrowing money from a private money lender is a fairly easy process.

Private money loans are great for people that want to invest in real estate and find convential loans are unavailable or not their best option.

Private money lenders are generally private individuals, institutional investors, portfolio lenders, hedge funds, real estate brokers, agents of REO (bank owned properties), or family or friends you may know personally.

Private money lenders loan you money on a short term, with a high interest rate and some upfront fees.  Points can range from 4 points up to 10 points.  A private investor is more concerned about the equity in the property than your credit.  If you have a property that you can show a lender has equity, and a plan on how you will pay them back, you should have no trouble finding a private money lender to help you.

Below are some suggestions of where to find the right private money lender:

• Financial Advisors, Accountants, and CPA’S
• Attorneys
• Family Members
• Realtors
• The Internet
• Other Investors
• Real Estate Seminars
• Investment Clubs
• Mortgage Consultants

Using a private money lender is faster than waiting for approval from a bank.  A bank could take anywhere from 30-60 days to finalize a loan.  A private lender can provide fast financing.  With a private money investor you are able to get things done more effectively.  You work on terms that work best for you, rather than on the banks terms.

Private money and borrowing from private lenders is a great opportunity, especially now with the current housing market.