Many real estate investors count on certain private hard money lenders for their source of funds. Yet getting the financing for various real estate purchases can be extremely hard if you approach the wrong lender. This post will help you inform the difference between these lenders and help you work with the ones that can help you… Singapore Licensed Moneylender
Not every hard money lenders really understand treatment and resell investment strategy being employed by thousands of real estate investors all over the country. Actually, there are many levels of private lenders:
1. Commercial investment lenders
2. Development lenders
3. Bridge lenders
4. High-end home lenders
5. Home lenders
By fully understanding your business model, you will be able to work alongside the best hard money lender that helps buyers like you. For me, it would be residential hard money lenders.
As well as that, these hard money lenders also change in their source of funds. They are lender lenders and private hard money lenders.
Bank Loan providers – These lenders get their funding from a source such as a bank or a company00. These lenders give away loans to investors and then sell the daily news to a financial organization like the Stock market. They use the money they comes from offering the paper to offer out more loans to other investors.
Since these lenders rely upon an external source for funding, the Inventory market and other financial institutions have a set in place of guidelines that each property must qualify in order to be eligible for loan. These guidelines in many cases are bad for real estate buyers like us.
Private hard money lenders – The type of these lenders is pretty many from the bank lenders. Contrary to the bank lenders, these lenders do not sell the paper to exterior institutions. They are a bunch of investors who are buying a high go back on their investments. All their making decisions is private and their guidelines are quite favorable to most smaller property investors.
Although there’s a huge concern with such private lenders. They just do not have a set in place of guidelines that they remain steady with. As they remain private, they can change their guidelines and interest levels anytime they want. Can make such lenders highly unreliable for real estate investors.
Here’s a story for you:
Jerry is indeed an real estate investor in Houston whoms mainly into residential homes. His business model contains rehabbing properties and selling them for profit. This individual finds a property in a good part of the town, puts it under contract and requests his lender for a loan.
The lender is promoting his rules regarding lending in that particular area of the city. Therefore, this individual disapproves the money. Jerry is left nowhere and tries to find another profitable property in another type of area of the town the lender seemed interested in.
He finds the exact property, puts it under deal and requests for the loan. The lending company once again denies the loan to Jerry saying that the market is under devaluation in that particular area.