What Every Investor Should Know About Private Lending 🏡💰

[Jackie Carmichael]

A lot of investors ask me: “Why would I use a private or hard money lender instead of a bank?” Here’s the truth → banks serve a purpose, but private lending is designed for investors who need speed, flexibility, and leverage. 3 Things to Know About Private Lending: Speed is Everything Traditional banks can take 45–60 days to close. In competitive markets, that’s a deal-killer. With private lending, you can often close in 10–14 days (sometimes faster). The fastest to the closing table usually wins the deal. Leverage is Your Growth Tool Instead of tying up all your capital, private lenders fund up to 90% of purchase and 100% of rehab (capped at 75% ARV) . That means you can scale to multiple projects at once, instead of waiting until one sells before buying another. Flexibility Beats Red Tape Banks don’t like distressed properties, heavy rehab, or unique deals. Private lending thrives there. Whether it’s a flip, rental, multifamily, or even new construction, the focus is on the asset and your exit strategy, not on W-2s or tax returns. Bottom Line: Private lending is not about replacing banks — it’s about giving investors the speed and leverage they need to grow.

[Jaycee Greene]

Quote from @Jackie Carmichael:

@Jaycee Greene 

Great question, Jaycee 

Private lending rates are usually higher than banks — think 10–12% with 2–3 points at closing, compared to a bank loan that might be 6–8% with minimal fees.

But here’s the trade-off:

• Speed & Access: Investors use private capital because waiting 45–60 days with a bank often means losing the deal. We can close in 10–14 days (sometimes faster).

• Leverage: Banks rarely fund rehab, while private lenders will do up to 90% of purchase + 100% of rehab (capped at 75% ARV). That lets investors scale multiple projects at once.

• Flexibility: Banks won’t touch distressed or heavy rehab projects. That’s where private lending thrives.

So while rates/fees are a bit higher, most investors view it as the cost of speed, leverage, and flexibility — tools that let them do more deals and grow faster.

I agree with all of what you're saying @Jackie Carmichael! As a former bank and CDFI lender in this space that now works with RE developers as their Fractional CFO, I've been impressed with how HMLs and PMLs have filled the void in the financing landscape over the last several years.