Typically, traditional lending institutions are not really interested in any real estate deals other than those involving buyers who wish to buy and reside in a single family home. While they will offer excellent terms to these potential buyers because of FHA guarantees, investors looking for money to buy fix and flip, buy and hold, or 2-4 SFR Multifamily properties, face a far more daunting task when it comes to finding investment capital.

Finding a traditional funding source for an unusual, but potentially lucrative, real estate deal is one of the most frustrating tasks around. Banks, credit unions and other traditional lending sources are just not interested in deals that fall outside of their “standard” parameters. Instead, savvy real estate investors turn to knowledgeable and experienced lenders who can understand a complicated investment deal, namely, private money lenders. 

With the continuing recession in the real estate market and the general malaise in the economy, it remains difficult if not impossible to finance anything other than a traditional, single family real estate transaction. In fact, if you have less than stellar credit, banks are reluctant to finance those deals unless the loan is backed by a government guarantee. While this situation is problematic enough for the individual who wishes to purchase a home for themselves, it creates far more significant problems for the real estate investor. One possible solution to this problem is the use of funds from private individuals and/or hard money lenders.