Obtaining a traditional mortgage can be a time-consuming process, and while it may be ideal for purchasing a primary residence, private money lenders offer better alternatives for investors. From faster funding to more flexible terms, here are the reasons why you should choose a private lender for your real estate investment needs.
Loans Based on Future Property Value
Major financial institutions use an extremely strict set of criteria to determine whether they will provide funding for a property. Not only do they consider your personal or business credit score, but they also look at factors like your income, your debt-to-income ratio, and the property’s current value. Unfortunately, inability to meet these criteria results in denial, and every denial is a missed income opportunity.
Private lenders consider much more than your credit score and income. Rather than deciding your fate based on perceived creditworthiness and the property’s current value, private lenders consider the property’s after-repair value (ARV) and its potential to generate income via rents or other means.
Flexible Loan Terms
Like a traditional mortgage, private loans come with terms and conditions. The property serves as the loan’s collateral, and you will repay your loan with interest over a specified period. Major financial institutions tend to be quite rigid with their terms, offering 15- and 30-year mortgages at varying interest rates depending on your creditworthiness. This lack of flexibility means that mortgages are very rarely tailored to the borrower’s specific needs.
With private money lenders specializing in real estate, the terms are not as rigid. Loans exist for a wide range of investment opportunities, and they are quite flexible from one situation to the next. Fix-and-flip loans, multifamily property loans, and even new construction loans serve specific purposes, but they can be tailored to your individual needs.
Fast & Reliable Access to Funds
When it comes to real estate investing, efficiency is priceless, and money talks. All-cash deals are the perfect scenario, but the truth is that very few investors have that kind of liquid capital. When cash isn’t an option, private lenders are the next best thing. A major financial institution could take 30 days or more to close on a property, but a private money lender can close in a fraction of the time, which can give you a competitive advantage in hot markets.
Because the qualifying criteria are flexible, and because there’s far less documentation required, private loans are far more reliable than their traditional counterparts. You won’t spend weeks waiting to find out if you’ve been approved, and when you are approved, you’ll have access to your funds almost immediately.
United Lending LLC is a private money lender specializing in real estate investing. We have decades of experience in real estate and finance, and we can help you find the loan product that is perfect for your unique needs. From rental loans to bridge loans and everything in between, we work hard to help make your investment dreams a reality.