With the world currently facing a global economic meltdown, the importance of private lenders in the real estate investment business has increased significantly. More and more investors in the real estate market are looking to lending from private investors as a viable option for supporting their property transactions.
Private lenders charge less fees in comparison to hard moneylenders. Often, private lenders will not charge any points, while hard moneylenders will usually charge from three to six points of the total borrowed amount.
Utilizing private lenders has a number of great advantages in the real estate market, such as:
• Simple, yet cost effective. One major advantage to private lending is the simplicity and cost effectiveness of the process. No other costs are charged in the deal besides the closing fees for buying the property, hazard insurance, title insurance, recording fees and so forth. You will need to assess the value of any property accurately before you approach your private moneylenders. It is also necessary to perform title research on the property as well as record it with mortgage. This will be enough for private lenders to consider your financing proposal.
• Considerably less paperwork. This is perhaps one of the greatest advantages to using private lending. Minimal paperwork is involved with such a transaction. In fact, the only documentation involved in this type of transaction is the mortgage, insurance binder and promissory note.
• Low fees. When you borrow money from private lenders, you do not have to worry about the high bank fees. The process is a simple one, so the cost is low. Compared to hard moneylenders and what banks typically charge for this type of transaction, private lending is actually quite cheap.
• Get approval fast. Private lending is ideal for borrowers who are racing against limitations of time because they are fast enough and efficient enough to meet such critical demands.
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Tags: private lenders, Property Investment, real estate investment, real estate market
{ 2 comments… read them below or add one }
Hi Sean,
Borrowing money from private lenders sounds like a great way to buy investment properties in the real estate market. I like that they offer lower fees and less paperwork and generally less hassle all round.
I just really need to get used to the idea of borrowing money from places other than a bank.
Wow..the question now is why are we using banks for our real estate investments?