As a real estate investor, being able to get financing for your investments is obviously your number one priority. You have a couple of different options in terms of financing types. First, you have private lending, and second, you have traditional financing as in through a bank or credit union. Here are the top five reasons that you would choose private loans over conventional institutional loans.
Competitive Interest Rates
Private lenders offer extremely competitive interest rates. Whereas traditional banks will restrict lending on investment properties, private lenders are actually seeking out investment properties and will be more likely to give you a favorable interest rate in exchange for the property.
Security of a Private Loan Company
Private loans are often misconstrued as being less secure than bank loans. However, this is not the case in most circumstances. Although when many people think of private lending, they think of direct lending between two individual parties, such as through crowd funding and peer to peer lending, this is not always the case. Just like regular bank loans, obtaining funding through private loan companies is just as secure if not more so than bank loans. Furthermore, private lending operations will make investment decisions based on you and your qualifications, looking for investors who are low risk.
Perhaps the most significant benefit of private loans is that they are generally much faster to acquire than other loan options available. Private lenders are able to make decisions quickly without so much paperwork and processing. in traditional loans, much of the process involves underwriting, which is not an element of private lending it all.
Reduced Credit Concerns
With a private loan your credit score does not have to be perfect. In fact, private lenders for real estate investments are more concerned with your investing experience and track record then they are with your credit score.
Benefits of Both Loan Types
Finally, private loans allow you to enjoy some of the benefits of traditional loan, without the often stringent requirements that traditional own Carrie. You will have more and better access to different types of loans, and you could even take advantage of hard money loans which will allow you to move properties more efficiently and with a great deal more flexibility as well.
When you need financing for real estate investment, there are boundless opportunities for private lending that you should look into. These are just a few of the different advantages that you would have access to when financing a real estate investment.