Private Money Loan

1 Reply

Wanting to find a private money loan to fund a wholesale deal I have access to. Anyone know what the typical qualifications for a private money loan are? Hard money loans are more for purchase and rehab but will private money cover minor a rehab? Will any up front money be needed to get private money? Thanks!

Hi @Joel Beauchamp

 Here are a few things to look for in researching private money lenders:

- LTV/Term/Points/Interest: these are all fairly straight forward, the more private the lender is the more negotiable they may be, especially if you have a good deal with clear comps and exit strategy.

- Junk Fees: make sure to ask about all other fees associated with the loan. At least in California, where the private lending industry is very competitive, most lenders charge around $3k in unnecessary fees, all can be avoided. There shouldn't be more than a few hundred for doc fees.

- No Prepayment Penalty: make sure there is no PPP, as these investments are very hard to predict an exact time frame. All lenders should want their money back asap, so they shouldn't be requiring a prepayment penalty - or prepaid interest.

- DIRECT Lenders: maybe the most important, make sure you are dealing with the actual check writer and that no one else has to approve the loan. Direct lenders should be able to close within 5 days on the majority of deals. If they aren't direct, there is more chance of the financing falling through.

Hope that helps! 

Best of luck to you.

-Ben

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.