If you’re thinking of investing in real estate, you’re headed in the right direction. Real estate is lucrative and flexible as an investment. You can do so many things with it, from renting it out to living in it yourself. Many people earn considerable profits from flipping houses, however, there are difficulties with every option. Financing real estate properties can be very difficult. There are, however, options that will work for most investors. In this case, a private money lender might be the right choice. Here are a few benefits of working with a private money lender.
More flexible than a bank
Banks are almost always part of a large corporation. The office that you visit will be just one of many. Unfortunately, all of the important decisions are made in their corporate office, and the person you talk to won’t be able to make any exceptions for you. Private money lenders don’t work this way. As the name implies, they’re privately owned and operated. This means that the person you’re talking to is much more flexible to make decisions concerning your loan. If there’s something that you need that isn’t technically allowed, they can probably make an exception for you, and if they can’t, the person who can is probably in the building. The can also be more helpful during the loan period, for example, if you need a little extra time on a payment. A standard bank couldn’t even consider that.
If your goal is to flip the property, then a standard bank is not the way to go. In most cases, they’ll set up a loan for twenty or thirty years. If you’re thinking about paying it off early, they’ll charge a hefty penalty to be able to do that. On the other hand, a private money lender will probably offer short-term loan options. If you’re planning on flipping a property, you’ll probably only have it for nine or ten months before you sell it. A private money lender will be more than happy to work with this timeline.
Extra cash for repairs
With most other financing options, the loan is for the price of the property minus the down payment. If you don’t have a considerable amount of money set aside specifically for repairs, then flipping a property can be a problem. After all, you won’t be able to fix very much if you don’t have money to do it with. Private money lenders will often lend extra money along with the cost of the property to cover repairs.
Many people who are not a part of the culture don’t understand flipping properties. This is even true of most lenders. Private money lenders, however, have been working with these types of loans for years. They understand how it works. This means that if you have a question, they’ll probably be able to answer it, whether or not it’s even about the loan. Even more importantly, if you have a problem, they’ll be able to work with you. Maybe repairs are taking longer than you thought they would. Maybe the property isn’t selling as quickly or for as much as you initially expected. Although there is no guarantee, a good private money lender will at least listen to your problem and do what they can to help. A standard bank will do nothing. Instead, they’ll send you rude letters demanding their money and begin the foreclosure process. The real estate flipping industry is a tough industry to be in, even for the professionals. Having a few people who are on your side can be invaluable.
Looking for more help finding financing for your fix-and-flip property? Contact us. We’re here to help you with anything you need.
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