8 Advantages of Hiring a Private Lender

By December 28, 2020 March 7th, 2022 Investor Top Picks, Real Estate Investor Tips

Advantages of Hiring a Private Lender

Planning to make some property investments but have no money ready? Many lenders are willing to lend you the funds provided you meet their loan requirements. But before you jump on any borrowing deal, you have to explore your financing options and only ensure you work with the best lender.

Private lenders are some of the available options in the real estate market and come with various benefits. If you have no experience working with a private lender, you need to start educating yourself on the subject before taking the bold step. Here are the advantages you’ll get from a private lender.

1. Private Lender Has Few Requirements

One of the things that deter people from applying for loans is the paperwork and the requirements involved. When compared to traditional lenders, private lenders have very few requirements. If you’re borrowing for a property, all you need is sufficient equity, enough cash for monthly payments, and a good exit strategy.

With few requirements, you’ll have better chances of getting your loan approved. Lenders with lengthy lists of requirements are always known to decline loan applications. The main aim is to keep away borrowers by making it hard for them to qualify, which is not the case with private lenders.

2. A Private Lender Offers Flexible Loans

To get a hard money loan, you have to consider different variables. Check the loan fees, application requirements, and interest rates, among others. All these variables are negotiable if you choose to work with a private lender, and you can choose the terms that favor you the most.

You can shop around from one lender to another until you find the terms that suit your needs. This kind of flexibility makes these loans some of the best options in the market.

3. You Have Full Control Over the Process

When working with a private lender, the real estate loan terms entirely depend on you. The loan type gives you control over the process to a large extent. So, you have the upper hand on every decision you make without any compromise.

Both you and the lender are not subjected to strict policies outside the company. The lender decides on the suitable interest rate to charge, and you have the freedom to negotiate all the terms of the loan facility. You can take advantage of this to foster a better relationship with your lenders.

4. Having Real Estate as Collateral

There is nothing that gives a borrower confidence other than having collateral. Private lenders also have nothing to worry about when they decide to lend a huge amount as there’s something to fall back on if things don’t turn out well. Having real estate as collateral means faster loan approval and the ability to get a good loan amount.

5. Possibility of Credit Improvements

If you take a loan from private lenders, you have a chance of improving your credit score.  Depending on the debt situation, borrowing money can greatly impact your future financial history. If you borrow and pay on time, you increase the trust that other lenders have in you. Although private loans do not always appear on your credit history, many lenders request 12 months of payment history to ensure a positive track record.

Having a good credit score increases your chances of getting another loan in the future. Just make sure you don’t miss any payments if you’re keen on improving your credit score.

6. Fast Loan Approval and Funding

The speed at which your loan application gets approved and the money shows up in your account makes private lenders the best option. In some circumstances, it takes as little as two weeks for you to get your loan approved and a few hours to get the money. All you have to do is ensure everything is in order at your time of application and get your appraisal scheduled as soon as possible.

Private lenders will consider things like your property, down payment, equity, and experience when working on the loan process. They also look at the exit strategy for the property and some cash reserves for the monthly loan payment. If all of these look reasonable, you don’t have to wait longer to receive the money.

7. A Private Lender Finances a Project That Can’t Be Funded Elsewhere

Private lenders are willing to finance projects that conventional lenders like banks will reject. For instance, fix and flip loans mostly don’t work with bank borrowing models. The process involves a real estate investor taking a short term loan to purchase a property, do the repairs, and sell or refinance.

Other lenders may not be willing to give such short term loans as they need to make some interest over a long period. The property may also not be in good condition to qualify for a bank loan leaving the investor with the option of taking loans from private lenders.

8. Simplified Loan Process

Fewer requirements mean a simplified loan application process. As long as there’s consent between two parties, the loan process is relatively simple for both the lender and the borrower. The borrower gets access to better facilities and conventional loan benefits.

This is also beneficial on the part of the lender as nothing delays the issuance of the loan money since the property is readily available to be used as collateral. This means hard money loans are flexible and straightforward for both parties involved.

Private Lenders Save the Day

Taking a loan from a private lender is the best thing that can happen to a real estate investor. The most important thing is to understand all the requirements and the risk involved before making the application. You can then shop around for various lenders, compare the terms, and choose the most suitable one.

But you can also make the process simpler by working with LendSimpli. The private lender is at your service with flexible lending rates and personalized experience to real estate investors looking for reliable loans.

Have any questions regarding real estate funding, or you need to make an application? Simply get in touch, and one of our team members will be happy to serve you.