The Advantages of Private Lending

An individual starting business has more often than not take the help of bank savings, credit cards, land and lease options and the like. Partners too has to be roped in. After having become self-employed it becomes apparent that for purchasing properties it is difficult to get loans. The amount is not modest but steep. Next there were other hurdles the first being the time factor with banks and formal financial institutions. It takes anything between to one to four months to get a loan for buying a house. Yet when the business is about buying and selling houses after sprucing it up a problem arises if there is a delay. In fact business can grind to a halt when there is a delay and a good bargain slips out of the fingers. On the other hand if the entrepreneur dealt with a private lender then the unit could have been bought, fixed and sold for a neat profit of $20,000 within a short time. A good deal will not wait for loan files to move. It will vanish. Competitors will snap it up. But the picture is different with a private lender giving support. While competitors are running around banks pushing files the enterprising realtor has his crew measuring and listing requirements. When finally the others do turn up the house is being painted up with a for-sale sign!

So when it comes to property loans Speed is the magic mantra. There are many magic lenders – the first one being a widowed mother having benefited from the insurance money left behind by her husband. When her child opted for being a real estate investor she advanced a loan and received 10% interest. The son or daughter kept to the commitment just like they would with a bank.

Some private lenders do not ask for monthly payments and this helps. The realtor can wait till the sale deed is completed and money is at hand. This is of tremendous and invaluable advantage. Money is paid when it is there read. No strain is caused during a lean period. Mother of course gets paid monthly because being retired this is her only source of income. But there are other private lenders who can wait. So after speed the next plus point is cash flow. The payment can wait and flow out only when it flows in.