Private money lending offers unique opportunities for real estate investors, focusing more on property equity than borrower qualifications. This approach fills gaps left by traditional banks that avoid short-term loans due to early payoff penalties and compliance burdens.
• Private lenders are equity-based, primarily concerned with whether sufficient equity exists for property liquidation if necessary
• Traditional lenders focus on borrower's credit history, income, and debt-to-income ratio
• Private money typically charges 9-11% interest versus 7.5-8.5% for conventional loans
• Bridge loans help homeowners buy before selling their current property with significant equity
• Spec builders prefer private lending for its speed, with funding possible in 2-3 days versus weeks with banks
• Communication is critical – private lenders prefer working with borrowers over foreclosure
• Finding reputable private lenders through title companies provides better results than random searches
• Interest typically accrues without monthly payments, with full repayment due at loan maturity
• Private lenders should be viewed as problem-solving partners, not lenders of last resort
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