I’ve been noticing more investors talk about using private money, especially for deals where timing or property condition becomes an issue.
For those who have gone this route, what situations made private financing the better option for you compared to traditional bank loans? Curious to learn from real experiences.
Investor · Collierville, TN 38017 · Member since 2017 · 602 posts · 451 votes
8mo
For me, private money makes sense when speed, flexibility, or condition matter more than rate.
Banks are great when the property is clean, stabilized, and you have time to wait. The moment any of those break down, private money usually wins. A few specific situations where private capital has been the better tool for us:
• Distressed or non-financeable properties where banks won’t touch it due to condition
• Tight timelines where closing fast creates the deal or protects pricing
• Value-add plays where the plan is to reposition, stabilize, then refinance
• Portfolio growth phases where bank seasoning or DTI limits slow you down
The tradeoff is obvious: higher cost. That’s why private money only works when the exit is crystal clear. If the refi, sale, or stabilization isn’t already mapped out, private capital becomes very expensive very fast.
I view it like this:
Banks are for optimization.
Private money is for execution.
Use each for what it’s best at, and don’t confuse access to capital with a good deal.