What is a Private Lender?
A Private Lender is a non-institutional lender that fund loans to borrowers for the purchase, and often renovation, of an investment property. Private lenders, commonly known as “hard money lenders,” issue short-term loans known as private money loans. Private lenders are a good option for short-term fix-and-flippers as well as long-term investors looking for a rehab project, cash out refinancing or quick funding.
Earning 10% interest in today’s market involves private lending secured by real estate. While banks are paying .0375 for a one year Certificate of Deposits, you will learn how to find the best loans and create an above average return. Any individual investor can lend to a property owner, instead of the property owner going to a bank. Private lenders take on the risks and rewards typically held by traditional lending institutions like banks and mortgage companies.
Private Lending has become an important fixed income vehicle for many investors with their personal funds, equity, and self-directed IRA accounts.
This type of investing offers the investor’s great returns and secured risk when structured properly because these investments are always secured by the actual property. You must learn the Golden Rule of Private Lending: Never lend more than 65% of the properties appraised value.
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