Dallas, TX · Member since 2019 · 13 posts · 4 votes
There are mortgage loans, private money lenders, hard money lenders, etc. what is the best option for first time investors, realistically do private lenders loan to people who are just starting out? Are bank loans the only way to go?
Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
5y
Realistically - no unless you have a lot of skin in the game (money bringing to the table for the project). Would you loan money to someone you don't know who hasn't proven capable? If they do, they will want to cover their risk (high interest, points payable, lien on property, etc.). Savings, home equity, family and friends, 401K loan, line of credit from stocks in your trading account, Uber driver savings - lots of ways to get cash to start. Just have to start thinking of where and how. Bank loans are one way and perfectly fine.
Lender · Member since 2018 · 617 posts · 275 votes
5y
Hi Marissa,
The best option for you will depend on your situation and your priorities/goals.
In general, if you are prioritizing speed and flexibility, then a private or hard money lender is likely a better choice. If you are prioritizing low cost of capital, then calling banks is probably a better fit.
Private lenders will vary quite widely in their lending criteria, so it may just be a matter of finding the right person.
There are also hard money lenders that finance first-time investors.
They are not the only way to go, but are also likely a good option to explore, as banks will generally provide a cheaper cost of capital than private or hard money lenders.