Learn This Before Asking For A Private Money Loan

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Learn This Before Asking For A Private Money Loan

Securing a private money loan can be one of the best financing options for real estate investments. However, before requesting a private or hard money loan, it is essential to ensure you truly understand how your particular needs fit into the process. 

Despite the flexibility, when approaching a private lender, you will need to know the things they see when granting a loan to articulate the kind of loan you need. Remember to make it easy for them to figure out if your deal fits their conditions immediately.

Many private money lenders consider four quick criteria to decide to give you a loan. In this blog post, we’ll break down exactly what these criteria are so you will dominate the game before asking for a private money loan for your residential or commercial real estate investment project.

 

Investment property financing

 

Table Of Content:

  1. Property type
  2. Property location
  3. Loan type
  4. Loan amount

 

Property type

Most buildings are considered residential or commercial investment properties, and which structures fall into which category can vary depending on local regulations and lenders.  

Private money lenders consider a range of criteria, including the property sub-type, condition, neighborhood, etc. Depending on the overall condition of the asset, private lenders may offer a more competitive loan product. Whether raw land, a rental property, a mixed-use building, or a commercial asset, real estate investors must thoroughly understand their property’s features and value to ensure they get fair terms from their lenders. 

You should know that private lenders tend to draw hard lines in this category, preferring to complete deals on a property they are familiar with.

 

Property location

As real estate investors, it’s essential to understand that one of the critical criteria lenders consider when offering a loan is the property’s location. Either New York, Texas, Florida or Georgia, they want to ensure that real estate investment will be profitable in the long term. Lenders look at the perception of an area by both real estate market value and long-term market potential. If a lender believes a site has good potential, they may be more likely to take on the risk of loaning money for real estate investing purposes. 

Property location can make or break a real estate investment, so researching an area before investing is key.

 

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Loan type

Lenders offer different loan types depending on how you will use the money and whether you will need the funds short-term (for as little as six months!) or long-term (as much as the standard 30 years). 

In addition to real estate purchases, they can provide funding for:

  • Renovations
  • Bridge Loans
  • Commercial construction projects
  • Fix-and-flip mortgages 
  • Other types of hard money loans. 

Suppose you are a more experienced real estate investor. In that case, you may have access to a more personalized type of loan that doesn’t necessarily fit specific lending standards, even for a private money lender.

 

How to buy investment property

Loan amount

As real estate investors, you will have a variety of loan amounts to choose from. Ensure to select the amount that best fits your specific needs carefully. Remember that real estate lenders consider more what’s “worth their time” in terms of potential profit. Your real estate funding may fall if you ask for too little or too much.

 

Conclusion

If you’re considering asking for a private loan, make sure you learn this first. The process can be daunting and time-consuming, but it’s essential to understand all the ins and outs before getting started. Luckily, our team of experts at RE Investor News is here to help. We’ll walk you through the entire process, step by step, so you can get the financing you need without any headaches. Give us a call today, and let us help you get started.

 

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Damon Riehl

Damon Riehl
As someone who has been in the real estate industry for over 30 years, I am always excited to share the latest market updates with investors. Being informed and up-to-date on the latest trends and changes in the real estate market is essential for making the right decisions when it comes to investing in properties. That’s why I aim to provide insightful information to anyone looking to invest in the real estate market.