Why Use Private Lenders for Real Estate Investment?

Private lenders are a top choice for a real estate investor. A private lender skips the banks and credit unions and loans money to you directly. Private lenders are increasing in popularity, especially when it comes to lending money for real estate.

There are many benefits to using a private lender for real estate. Choosing a private lender can get you the money you need to begin capitalizing on your investment!

Here are several reasons why you should use private lenders for real estate investment.

Using a Private Lender for Real Estate Investment

When using a bank, there’s always a long list of paperwork you’ll need to complete. They want to see your pay stubs, credit history, and employer contacts. A private lender wants to know your credit history, but it’s not the most important thing in the rental loans process.

A private lender wants to see that you have sufficient equity in your real estate and cash to make payments in your rental loans. They care more about the piece of property you are about to purchase rather than past payments. You must show that your real estate investment is a viable project, so the private lender gets their money.

A bank may require a 20% downpayment on your real estate investment. A private lender may fund the project in full with no (or little) money down.

A private lender understands that as a real estate investor, your time is valuable. They know you’re coming to a private lender to streamline the process to get your money quickly.

A private lender doesn’t need to learn every piece of your financial life as a real estate investor.


A private lender is not held to the same regulatory rules as a traditional bank, meaning you can get approved faster. Government rules typically mean red tape. A private lender doesn’t have the same rules.

When funding your real estate investment, time is money. It can take months to close on a bank loan. A private lender can get the process moving much quicker than a bank.

Imagine going through weeks of delays when funding your real estate because you couldn’t get the funding faster. Those delays could be costly.


Unlike a traditional bank, a private lender can also do rental loans with a mix of APR and interest options. You may also consider a bridge loan, which is short-term financing of your real estate project.

A private lender will also allow you to borrow money that will also pay for repair costs. As a real estate investor, this is key. You will need money to pay for projects associated with your real estate investment.

You might also be able to negotiate certain fees associated with your loan.

Since the loan is essentially between two parties (and not a big bank and you), there’s more flexibility. Your business model may constantly change, and you’ll need flexible terms when accessing money for your real estate investment.

Your unique arrangement as a real estate investor may be the fit for a private lender and how they may make the difference.

Shorter Repayment Time

As a real estate investor, you are not looking to take out a 15 or 30-year mortgage. You likely want to pay off your real estate investment in a much quicker period of time.

A private lender offers shorter repayment terms, unlike a traditional bank. A private lender may charge a higher interest rate, but it is still a better deal than going to a bank as a real estate investor.

Many banks will force you to pay a fee if you prepay your loan earlier. Most private lenders will charge you a penalty should you pay the loan earlier than planned.

More Control

When getting money from a private lender as a real estate investor, you have more control over the process.

Once the private lender approves your loan, there’s room to negotiate on things like the interest rate or repayment terms. Because the private lender is not regulated like a large corporation, they are not subject to outside rules.

Working with a private lender, the relationship is much more personal. They understand your real estate investment better than a large bank.

Unique Project Funding

For a real estate investor looking to house flip, a private lender may be the best option. You’ll need quick cash to seize on a good deal, and a private lender can get you that money.

Banks typically don’t like risky rental loans, so a private lender will be better suited to fund your real estate investment. House flippers typically take a short-term loan, fix up the property, and then sell it for a profit. This is not a typical bank loan model.

Once your business gets moving, and you flip multiple projects with larger profits, a private lender will see your motivation and skills.

Develop a Relationship

As a real estate investor, you’ll need access to money over several periods of time for your real estate investment.

By working with a private lender, you work to establish the relationship and trust you’ll need. While you may begin with one project, imagine in several years tackling multiple projects at once. You’ll need to work with a lender who trusts you and your business model.

A healthy relationship with a private lender can help make your real estate business more successful.

Choose Private Lenders for Real Estate Investment

Working with a private lender is best for your real estate investment. There are few application conditions, speed, flexibility, and shorter repayment terms. You also have more control over the process and can get a unique project funded while developing a personal relationship.

Start the application process with us today for your real estate investment with a private lender!