 If you've ever had a business or bought a home, you know how difficult it can be to get a loan from the bank. For one, it takes forever to get the money you need.
I once had to wait over five months on a home without a furnace because the bank wasn't sure if they wanted to lend me money on the type of house I was rehabbing. The bank just didn't understand that you buy them ugly and cheap, then fix them up and sell them for a profit. If only I would have used a private lender on the deal. By the time the bank got around to closing, I could have had the home fixed and sold if I'd of used a private lender. The beauty of using private lenders, sometimes called hard money lenders, is that I have the finances I need, when I need them. There is no time lost waiting around for the bank to evaluate every aspect of my loan and dissect why they shouldn't give me the money. This way, when a great opportunity comes my way, I can snatch up the deal before my competitors because the money is there for me and I don't have to scramble around for bank applications. Then my crew can swoop in and rehab the property before anyone else can get a loan from the bank. That is the beauty of have private lenders.
Another reason having private lenders is so beneficial is because of the flexibility you can have with loan terms. When I started using private lenders more frequently for my real estate investments, I learned that some of my lenders were willing to be flexible when it came to loan terms and payments.
The benefit is HUGE. Imagine that instead of monthly payments, you structure a loan so that you repay when the property is sold. As a result, cash flow is improved.
Clearly, the benefits of having private lenders is pretty remarkable. Not only do you not have to wait around for a bank loan (if you can even get one nowadays), private lenders are often flexible with loan terms and can improve your cash flow.
(Posted by K.Skowronski)
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