For investors who have a number of homes in their real estate portfolios, it can be difficult to find reliable financing for each and every deal. Sometimes riskier investments, like fixer upper properties, aren’t easy to obtain a loan for when you’re dealing with a traditional institution such as a bank or credit union. Scenarios like these are where private lending can be a great solution for financing your investment. Private loans offer investors speedy financing and flexibility in loan structure, among many other benefits that make them ideal for real estate investing. Continue reading to learn more about private lending, and how it can help your real estate investments succeed.
Speed and Efficiency
One of the best things about working with a private lender is their ability to deliver quick financing when you need it. These loans are known to have a faster application process than standard mortgage loans, and can deliver funds in as little as 10 days after applying. This is important because it lets investors secure time-sensitive investments, even in situations where their funds may be tied up in other projects. For example, let’s say you’re in the process of selling a property and won’t be able to access those funds until after the sale. With a private loan, you can still move on a lucrative opportunity when you come across it and then repay the loan once you have completed the sale.
Flexibility in Loan Structure
The other great benefit of using private loans is their flexibility. Private lenders are more willing to work with you to build a loan that fits the needs of your deal. Unlike mortgages, private loans may be issued for shorter time periods ranging from 6-24 months. This makes them great for fix and flip investments where you’ll be reselling the property shortly after you purchase it, and these loan programs also often include funds to cover renovation costs. The flexibility of these loans allows you to capitalize on more opportunities in the market to grow your portfolio.
Access to Non-Conventional Financing
Private loans can provide investors with financing even for more unconventional deal scenarios. For example, bridge loans are a type of financing that can help you “bridge” the gap between purchasing a property and the sale of a previous piece of real estate. In situations where your funds may be tied up in a sale or another project, this can let you acquire properties when you otherwise wouldn’t have been able to. Many of these loans also offer interest-only options, with minimal monthly payments and the principal amount only being due at the end of the loan period. This allows you to focus your funds on the project at hand so you can get your deal done quicker and repay the loan once you’re in a more financially stable position.
Less Stringent Eligibility Requirements
Another way private lending can help your real estate investing goals is with their less stringent loan requirements. Traditional financial institutions often have lengthy loan application processes that come with strict credit and property criteria. Private lenders don’t have as strict of requirements, with loans based on the financial prospect of your investment rather than your personal eligibility. This means that even if you have less than stellar credit, you can still qualify for a private loan so long as your investment makes good financial sense. Private loans are also a great option for self-employed borrowers, as it can be difficult to meet the tax return and bank statement requirements of a mortgage loan from a traditional lender.
Relationship Building and Personalized Service
A hidden benefit to working with a private lender is getting to build a relationship with a company that operates in the real estate space. This can help investors in many ways in the long term. Once you have worked with a lender, they can begin to offer you more personalized service to streamline the financing process going forward. Private lenders also often have great connections with other real estate professionals and can connect you with them if need be. When you consider these benefits along with the resources they can provide you to find success, private lenders are sure to be a great asset to you in your real estate investing journey.
The easiest way to save on a real estate investment is to find a trusted lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance an investment property?Connect with us today.