What is Private Lending and how can you build wealth with this strategy?
Private money refers to lending money to a company or individual by a private individual or organization. While banks are traditional sources of financing for real estate, and other purposes, private money is offered by individuals or organizations and may have non traditional qualifying guidelines.
Private lenders typically charge interest rates between 7% – 12% or more, which is more than the 4% – 6% found with conventional mortgages. Further, private lenders sometimes charge lender fees as high as 10%, charge for an independent appraisal, as well as assess fees for prepayment.
Most people that choose to be a private lender for real estate have several reasons for using this strategy:
- Don’t know where to put their money
- Want a higher return then stock market, mutual funds, etc
- Want to invest in real estate but does not want to become the expert, or doesn’t have time
- Want a secure investment
The advantages of being the private lender in a real estate transaction are:
- You earn a predetermined rate of return
- Your loan is secured by the real estate
- You get paid first
Important things to look for when lending money to real estate investors included the experience of the borrowers, the more, the better. How many deals have they done and for how long? Ask for references from other private money investors.
This gives you a glimpse into Private Lending to build your wealth as a real estate investor. If you would like more information, you can call or text Wayne at 408-981-5715.
Now we have covered the 4th Strategy of the 7 Strategies to build wealth in real estate.
Here are the previous strategies for your reference.
Disclaimer: The information provided on this page is for educational purposes only. Amelia Wong and Robert Wayne Mason, Inc. makes no warranty or representation as to the accuracy, completeness or reliability of this information. Please be advised that this content may contain errors, is subject to revision at all times, and should not be relied upon for any purpose. Under no circumstances shall we be liable to you or anyone else for damage stemming from the use or misuse of this information.