Services

What is Private Lending

Private money lending is when individuals lend their own capital to other investors or professionally managed real estate funds, while securing said loan with a mortgage against real estate. Essentially, private money lending serves as an alternative to traditional lending institutions, like big banks. The benefits to the private lender are the security of asset-based lending and returns that are typically better than those provided by traditional investments.

Funds Sources That Can be Utilized to Lend

Lenders typically use savings, lower-interest lines of credit, and self-directed Individual Retirement Accounts (IRA’s). Many private lenders have found better ROIs by divesting non-performing and/or low-performing assets.

FAQs

Why is Private Lending a good strategy for an investor? The traditional lending middlemen (banks, credit unions, finance companies, investment managers) are eliminated in a Private Lending scenario. Private Lenders receive the full proceeds of their investments (collateralized by real property) without sacrificing (often significant) portions of their returns to other institutions and organizations. This enables the traditional risk / return results to better favor the investor. Additionally, the Private Lender is relieved from day-to-day involvement in the construction, rehabilitation or management of real estate, thus freeing their time and energy while maximizing their investment return with one or more passive income streams.