One of the major hurdles in securing finance for real estate investment can be overcome using private money investors. To create opportunities for successful real estate investment, private investors can provide a more flexible financing option. Securing private money can help facilitate a more successful real estate transaction and allow the structuring of short sale deals, real estate flips and the management of necessary financing for those who might otherwise be precluded if seeking loans through traditional lending institutions.
Using Private Money
Private money can be used when you are seeking a source of funds that is more flexible than what is available through banks and similar lending institutions. There are a number of private funding sources around, and these often have the advantage of being available at a lower cost and provide the opportunity to work with investors who really know you and your investment needs and strategies. Using private money instead of taking out a conventional loan is often much simpler, particularly when you have a private investor you work with time and time again. You can save yourself a massive amount of time and effort when you don't have to prepare the mountain of documentation necessary for a conventional loan. With this option, there is still no guarantee the bank will provide the loan.
About Private Money Investors
The key difference between a bank and a private money investor is that the latter has a lot more flexibility than a bank. When you borrow money from a private money investor, their main priority is whether the loan will make them a profit. While a bank will do extensive credit checks and look at your background in detail, the private investor will focus on the details of the deal that you have put together. Their focus will be what you're plans for carrying out the real estate deal are and endeavour to understand what the property transaction entails. This generally makes it easier to manage the loan and the real estate transaction when dealing with short sales and REOs.
The other big advantage with a private money investor is the time frame for securing the finance. While a bank could take up to 30 or even 60 days to finalize a loan, a private lender can often provide finance very quickly. When you have put together a deal for a property to flip, using private funds allows a much speedier finalization of the deal, so you can move on to the next transaction.
Sourcing Private Money Investors
Finding private money investors to assist with real estate deals is one of the first things you need to have under control. When you are managing real estate transactions, you want to have the necessary funding readily available to ensure the deal proceeds smoothly. Securing a quality private money investor means you can manage things more effectively, structuring real estate deals on terms that work best for the deal you have put together, rather than on the banks terms.
A good place to begin networking and finding potential private money investors is through your local REIA. With private investment, it's often about who not what you know. With a solid network in place, you will often find that you can come into contact or receive an introduction to someone who has available cash they want to invest.
When you have found a potential private money investor, it pays to meet with them and discuss your deal, what your plans are and how you can help them profit. The private investor is looking to see what you can offer that is unique to other prospective investments. Present a clear plan of what they can expect in return for entrusting their money to you, outlining what your plan is and how secure the proposition is. The more solid your plan is, the more confidence they will have that you are the right person with home to invest their cash.
Using private money and borrowing from private money investors is a great opportunity, particularly in the current turbulent times. Banks are much more conservative about their lending these days and when you borrow from a private lender, the process can often be much simpler than when trying to get approval from a bank. Investment in real estate necessitates rapid action to secure the deal. Private money is the perfect choice when aiming to take action quickly and achieve a positive outcome from a real estate deal.
Julian Lee - About the Author:
Julian Lee is an experienced Real Estate Investor and Internet Marketer in South Florida who actively flips properties and leverages the power of the internet to close more deals. To find out more about getting private money to flip short sales and bank owned properties, please visit http://PrivateFundsForDeals.com and register for a free report.
