Share your thoughts

[Adaze Foltz]

In your opinion, what are the benefits and risks of private money lending compared to traditional financing?

[Mitch Messer]

@Adaze Foltz

I've been both a recipient and an originator of many private loans.

Provided you are working with a legitimate and experienced private lender, I see TWO main benefits:

1. SPEED - I've had private loans close in 4 days. Once the lender says "yes" they can fund immediately. No traditional lender on the planet is going to fund that quickly: You should expect 30-45 days to close.

2. RELATIONSHIP - With a private loan, you're able to establish and develop a relationship with the actual lender. This comes in handy if things get funky and you need to make adjustments mid-loan. You can talk to a single person and come up with a reasonable solution. With traditional funding, you're NEVER dealing directly with the person with the money. It's all intermediaries and committees and underwriting teams. So, if things do go sideways, it's much harder to negotiate your way through.

And, provided your loan is structured properly and closed with a competent title agent, I see no greater risk working with a private lender than with a traditional one.