Private Money Loans

Private money loans are an important source of funding for today’s California real estate investors. Before the real estate bust it was relatively easy and inexpensive to get a loan from your local bank or mortgage broker. But those days are long gone as traditional lenders have tightened lending guidelines and in some cases, have gone out of business.

Real estate investors need funds to grow their business and help new home buyers achieve home ownership. Private money is a growing source of capital that is both affordable and readily available in most American cities like Los Angeles. Instead of seeking money from banks, savings and loans, and even hard money lenders who charge high interest rates, fees. Private money offer a alternative solution to growing your real estate business.

Where does Private Money come from?

Private money can come from all walks of life. From a neighbor or relative to a doctor, businessman or retiree that wants to earn a better return on their money then traditional investments are paying today. They may not want to own rental property or mange tenants, but are simply happy to earn 8-12 percent while most money markets and bank CD’s pay less then 3 percent.

Private money lenders are looking for investment returns that are secured by local real estate as collateral. In addition, private lenders want to be secured by a pledge of local rental properties real estate. Most private lenders want to be able to actually see the property that is securing your investment and, in fact, will most likely drive by and see the property from time to time.

Private money lending is the process of borrowing money from private lenders (not banks or financial institutions) at rates higher than banks or savings and loans and guaranteed by local real estate rentals.

Private money come in many forms

California private money lenders usually come in two forms. First mortgage lenders lend up to 70% to 75% of the purchase price and expect the real estate buyer to invest 25-30% of their own money. Second mortgage lenders are harder to find and they usually keep the total loan to value less then 65%.

To apply for a private money loan in San Diego click here.


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