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Private Lending Secrets - The Top 3 Reasons Why Private Lending is the Key to Real Estate Investing

By Michel Lautensack

Republish: EasyPublish™ Published: 08Jun2009 Word count: 443 Viewed: 96 time(s) Get Free Content For Your Site

When I first got into real estate investing I was always using my own money to pay for everything including the 20% down payment of the purchase price, rehab costs, closing costs and all the other cost that came up unexpectly. It did not take long to drain my bank accounts with this plan.

This is where I knew I had to have another plan or my real estate investing business was going to come to quick halt. I finally started utilizing private lenders. these lenders would help me fund my down payments, some or all of my rehab costs and even some of the loans costs. I finally had a way to buy real estate without using much or even any of my personal funds.

What is the importance of private lending? The answer is using private lenders to fund your real estate deals. Private lending is a consistent source of funds to purchase real estate deals that you can go back to again and again and again. In fact, the more you use, the more will become available as you develop relationships with more private lenders.

Having the ability to fund all of your projects with private lending is critical to a real estate investors success in this business.

There are three great reasons for using private investors to fund your real estate deals and allow you to grow your investment business.

First, utilizing private lenders will free up your cash to be used for new deals and for making offers versus such things as down payments, rehab costs, and all the costs associated with acquiring a piece of investment real estate. Now you can focus on new deals with your money and use your private lenders to fund the deals you have under contract.

Secondly, private lending is really the only game in town at this time. It very hard, if not impossible for the average real estate investor to get traditional loans from bank or saving and loans with great credit and at least 40% down payment. Hard money lenders are a thing of past as the credit crisis has wipe most of them out. So you are left with private lenders as the only real dependable source of loans to buy investment real estate.

Third, the benefits of private lenders is that the money is relatively cheap at 9% to 15% versus hard money at 25% or more. The documentation and forms are very simple and only require 4 documents to close a private lending deals versus a bank loan with over 4 inches of paper. Lastly, and most important there are no personal guarantees with private lenders like bank money or hard money lenders.

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