Types of Private Money Lenders

Buying requires money thus it is called investment. An investment cannot be materialized if there was no money involved into the buy-in process. Most often than not, people investing into real estate are the ones who are in need of the help of a private money lender.

Real estate investors usually take time to find the next deal that they can close. A lot of meeting for potential prospects needs to be done and some just get lucky to be able to find the right prospect to close the deal. They next thing they think of after closing a deal is for the prospect to have enough money to get the project going. To make it easier for both parties, real estate investors try to tie up with private money lenders for their deal and fund their projects.

Bridge Lender

Private money lenders are everywhere. They are private individuals or organization lending their money on people who are in need of it with rates that comes along of it, in a way to earn from their money. They money loaned from private money lenders are usually secured by a note or deed of trust for the purposes that serves it most of it for real estate investments or transactions. Who can you go to if you need money to fund your investments?

Family and Friends

Loaning money from relatives or friends is usually not a good move. A few good things need to be considered. They may be the ones that you can easily go to on this kind of situation but when then the investments don’t turn out the way you want it to be, you can be burning bridges with these people right there and then, if you can’t return the money you borrowed. The best way to go is, check who are these people close to you who are most likely will still be okay if your investments will not succeed or will still be okay if it will take you a little longer to pay their money back.

The advantage is that, it will be easier to loan money from people you know already and they can give you a better grace period on the payment schedules but the risk of losing the relationship with them are highly at stake too.

Accredited Investors, Strangers or People you find through an Advertisement

These type of private money lenders are people that you barely know or people that are total strangers to you. They are a list of this type of lenders but the hard thing is that, it may take a while for you to get the capital because since this is a transaction most likely than not between parties that who don’t know each other, there might be or will be rigorous process to follow and rates and grace period of payment schedule will be high and strict.

Investments are good but if you are living from paycheck-to-paycheck, think very carefully as to the best time to place an investment. Investment are great way to achieve financial freedom if planned well but it can be the worst thing you can dream of on doing if you just didn’t think all the possibilities in may bring to you. At the end of the day, there will always be two sides of the coin, either the investment will turn out good and earning or it will turn out bad and makes you end up on a pile of debts.