Private Money, Partners and Hard Money Lenders – Buying Real Estate In Our Current Credit Market

Whether you are a new real estate investor looking for your first property or a veteran that buys 10 houses a month, in our current real estate market, even with the recent lifting of the 4 property limit for investors for highly qualified buyers, it is critically important to prepare your financing in advance.

Of course, you could use investment strategies like lease option, subject to or other types of owner financing to avoid this challenge altogether, but there are so many great deals right now being offered by banks or motivated sellers that having access to some cash or immediate financing can make a huge difference in the opportunities that are available to you.

So, what are some solutions to finding money and/or real estate investor financing for making these purchases?

Well, the big ones that immediately come to mind are: private money, partnering and hard money lenders (in that order).

Private money is when you approach people that are earning 3 to 5% on money they have invested in bank CDs and offer to pay them 6 to 10% (sometimes more) for lending money against a property you are buying. Instead of them lending the money to the bank and getting the lower bank deposit rates and then having the bank turn around and lend that to folks to buy homes, they become the bank lending directly to you to purchase property and they make the extra profit that the bank would otherwise make.

Partnering to buy more houses than you could by yourself can be a great strategy for the right partners. I think it is important that all your partners realize the pros and cons of investing in real estate before entering into a partnership and having a well drafted partnership agreement by an attorney that is neutral to both of you might is well worth the money. The great thing about partners is there are a lot folks that are interested in investing to real estate and have resources (cash and/or credit) to buy, but don’t have the time or expertise to find truly great deals and then manage them effectively during the sales or rental process.

While hard money lenders are becoming stricter in their lending requirements and a large portion of them have left the business during the latest market correction, there are still hard money lenders that, with the right deal, are ready to lend money to make a purchase. Networking at your local real estate investor club meetings and your local newspaper are the best resources for finding hard money lenders. Rates and terms vary widely, so shop around.

Until my next post,

James

P.S. Take your real estate investing business to the next level by upgrading to our Real Estate Investor Bronze Membership now.

Related posts:

1. Finding Hard Money Lenders In Our Current Economy I just had lunch with an friend of mine that is also a real estate...
2. Protecting Your Private Money Lenders With Reasonable Loan To Values I am a huge advocate of spending part of your marketing time each day marketing...
3. Raising Private Money For Real Estate Investing If you’ve been watching the news lately you might have heard some of the breaking...
4. Finding Money: Tips for Locating Hard Money Lenders for Real Estate Investing Hard money loans are available from a variety of sources. First, check with your local...
5. Finding Money in Unlikely Places: Private Investor Loans for Real Estate While you should always be on the lookout for owner financing opportunities, it’s nice to...
6. Private Money Frequently Asked Questions I am in the process of putting together a series of frequently asked questions from...
7. Mailing List of Private Lenders Between my meeting with my title company representative on Monday and my meeting yesterday with...
8. The Basics Of Financing Real Estate Deals – How To Keep Investing In Today’s Market Every investor needs to be familiar with the different ways of financing real estate deals....
9. Hard Money for Buying Properties I recently got a call from one of our non-local real estate agents who works...
10. Is private lending really a safe investment? Here is an extremely important question to address for your potential private money lenders. It...