Private real estate loans are a valuable tool that investors can use to increase their portfolio’s returns, as it gives them access to funding in scenarios where traditional bank loans don’t make the cut. Working with a private lender has many advantages including quicker access to funding and the ability to fund a more diverse range of property types. Many of these lenders are well-established in the real estate space, and can help provide you with a smooth funding experience. If you are a real estate investor looking for access to more funding for your next project, a private loan can be very beneficial. Continue reading as we discuss the benefits of working with private lenders and how they may be able to help you with your next real estate investment.
Understanding the Importance of Relationships with Private Lenders
Building a relationship with a private lender offers you benefits beyond your first deal working with them. As well as offering financing, a good private lender is able to provide you with resources like financial planning tools, and connect you with professionals that can assist you in conducting real estate business. As you continue to build trust with a lender, you may gain access to exclusive funding programs reserved for experienced investors. Having a well-established process with a lender can also help you with the speed of funding a project, which is important for securing time-sensitive deals.
How to Find Reliable Private Lenders
The key to a successful real estate deal is working with a reliable financing partner. The lender you choose to partner with can have a big effect on your overall experience. That’s why it’s important to look into the background of a lender before you move forward with them. A reliable lender will have a proven track record of delivering loans and a good overall reputation, which will tell you that it’s a relationship worth investing in. There is no replacement for being honest, consistent, and communicative throughout the lending process.
Navigating Loan Challenges
In order to ensure a smooth funding experience, you’ll need to align your goals and expectations with your chosen lender. Many real estate lenders offer asset-based financing which means that while your credit is less of a factor in approval, the property being financed will be scrutinized. This also means you’ll need to prove the deal is financially viable in order to be approved for a loan. Understand that these qualifications are intended to ensure both parties succeed with the project. Stringent guidelines can be the sign of a financing partner that takes risk seriously when it comes to investments.
Private Lending Use Case Scenarios
There are many deal scenarios where private lending can be the preferred option for financing. Since traditional mortgages are issued for 15 or 30-year periods, private loans are more suitable for short-term investments like fix and flips. Many lenders offer products ranging from 6-24 months, and may provide funds to cover renovations, unlike bank loans. Private loans can also be used to increase your leverage in an existing project, and cover business expenses while giving you time to secure permanent funding.
Best Practices and Takeaways
Beyond gaining access to financing, cultivating a relationship with a private lender can be very beneficial as it provides you with more opportunities in the market and a simpler real estate investing process. As you continue to work with a lender you will gain access to more investing resources and even quicker loan approval. If you want to make the most of the relationship, you should be professional, courteous, and responsive with communications in hopes that they will do the same. This will ensure the smoothest experience for both parties and help you find success.
Do you have a real estate deal you would like to obtain financing for? 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. If you are looking to finance a real estate deal, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.