Real Estate Lender · Miami, FL · Member since 2013 · 243 posts · 24 votes
I have heard of several cases where real estate investors have relied on private investors to lend on a deal and that the following has happened:
1. Too slow;
2. Do not return calls;
3. Too conservative;
4. Ask for too many docs, income, credit, etc.
5. Are scared of anything less than primo property;
6. And when all is said and done, they back of the deal for some bogus excuse and leave the investor holding the bag!!
Now of course, although I have truly head this tale more than once from mortage brokers, I am aware this is a generalization. But I am HEARING this more often.
How do you feel? Would you rather work with a professional HML or with a private investor? What has been you experience.
I work with two primary private lenders, and three that fund one deal at a time.
The ease of working with them, the minimal paperwork, they all fund purchase and rehab 100%, I do six month notes and pay all interest upon closing.
I have not had one get "squirrelly" on me, or not deliver, the HMLS I have talked to seem a lot more complicated, with a greater chance of not funding than any of my private lenders, but I may be the exception.
I work with two primary private lenders, and three that fund one deal at a time.
The ease of working with them, the minimal paperwork, they all fund purchase and rehab 100%, I do six month notes and pay all interest upon closing.
I have not had one get "squirrelly" on me, or not deliver, the HMLS I have talked to seem a lot more complicated, with a greater chance of not funding than any of my private lenders, but I may be the exception.
I have both unsecured private money and several individual hmls that are loaning their own funds. Everybody is professional, fast, and happy to fund. They just wish, like I do, that there were more deals to fund.
Caution on the part of anybody lending private money makes sense, but it sounds like maybe the stories you are hearing involve people new to private lending? Where I am, lenders are competing for placement of funds. The property and numbers have to make sense, but experienced lenders know usually know if it won't work for them way before closing.
Two of my recent re-sales went to buyers with private hml funds. Total fixers in rough neighborhoods sold at a good price. The lenders were way more professional, responsive and on top of everything than the buyers.
I think you're hearing about it more often because, as stated, there are more new Investors (and Lenders) in the game. Particularly those who don't know how to screen lenders and tell the BS ones from the beginning.