Structure of private lending

[Eric P.]

How does the structure of private lending work exactly? Is it money from friends, family, and everyday average Joe investors? Is it simply just an I.O.U. and keeping track yourself of who you owe money or does it still require to undergo written contract agreement? If I still require a mortgage even after receiving some funds form private lending, wouldn't it raise a red flag to the bank where I got the money from when showing proof of assets? 

[Account Closed]

A private lender can be any non-traditional lender. It could be a family or friend or it could be a hard money lender. Hard money lenders are lenders with less regulations than traditional lenders (banks) and they can help the borrowers with their investments more efficiently than banks. However, the interest rates are generally higher. Hard Money lenders really don’t look at credit like traditional lenders because the loan is based on the value of the property that serves as collateral.