Many fortunes have been made and lost in the residential real estate market. The recent downturn has made many traditional lenders very hesitant to lend to all but the very best applicants. Still, one person’s loss is another one’s gain and there are tremendous opportunities available in residential real estate. It is simply a matter of finding investors who are experienced and knowledgeable enough to recognize when a real estate deal is extraordinary.
Most inexperienced real estate investors will approach their family and friends and then traditional financial institutions when borrowing money. While these options are, indeed, excellent options, if one can convince them to invest, more experienced borrowers are also aware that private money lending institutions are far more flexible in their lending practices.
Family and Friends
Many times, this option seems to be the easiest route for borrowing money, but the funds often come with unexpected “strings” attached. While family and friends are usually willing to help, they do not always have the necessary amount of money. In addition, if the funds are not sufficient to fund the whole deal, the loan can actually complicate matters with a traditional lender.
The financial lending institutions of the United States are, indeed, a very reliable provider of funds to real estate investors. In fact, the vast majority of American homeowners and real estate investors would not have been able to invest at all if not for banks, savings & loans and credit unions. While these institutions are willing to loan monies for a real estate purchase, they are tightly regulated and the loans and properties must meet stringent requirements for the loan to be approved.
For borrowing money, the most versatile source of real estate investment funds is through the use of private money lenders. These experienced investors have the resources, the expertise and the experience to evaluate the risks and rewards of a real estate transaction. Borrowing money from them comes with a predefined set of terms. In addition, they are able to fund a much broader variety of real estate deals as they are only bound by the law and their own investment instincts.