7 Reasons You May Need a Private Money Loan This Year

A private money loan is any loan that comes from a non-bank source of financing and includes hard money loans, payday loans, crowd funding, peer-to-peer loans, and bridge loans. Although banks are known for competing amongst themselves to offer the lowest possible interest rate, private money loans are typically at much higher rates of interest. So why would anyone pay the higher interest rates associated with private money loans? Here are 7 examples where a private money loan could be the ideal type of financing for you or your clients this year:

1. 1. Fast Real Estate Transactions: Good real estate deals don’t wait for bank financing. Most of the time it’s either cash only, or, a private money loan.
2. 2. Partner Buyouts: Most banks won’t make you a loan to buy a partner or family member out of a property that is jointly owned, but private money lenders will.
3. 3. Bad Credit: Banks typically steer clear of borrowers with foreclosures or bankruptcies on their credit, but private money lenders aren’t scared off by bad credit.
4. 4. Foreign National Real Estate Purchases: For foreigners looking to buy real estate in the U.S., even with large down payments, it is difficult for them to obtain a bank loan. Many private money lenders will lend to foreign nationals on U.S. real estate purchases with sufficient down payments.
5. 5. Bank Financing too Slow: See number one above. Depending on the circumstances, a loan may be needed very quickly. Banks are not known to move quickly.
6. 6. Uncle Sam knocking on your door? Unexpectedly large tax burdens can really put you in a bind. Private money loans are designed to allow people to borrow against assets they own to cover surprises such as this.
7. Distressed or Vacant Property Purchases: Often the best values in real estate can be 7. found in vacant or distressed property purchases. Typically banks want to see that a property has a certificate of occupancy, or that it is generating income, before they will lend on it.

There are so many more reasons that you or someone else you know may need a private money loan this year. A private money lender can be your best friend when certain circumstances warrant, so it’s never a bad idea to have a few in your list of contacts. What other reasons would you add to this list for why someone may need a hard money loan?

Posted by Corey Curwick Dutton, Private Money Lender