How Are You All Using Private Money Lending in Today’s Market?

Question

I’ve been having more conversations lately about how investors are adjusting their financing strategies with banks tightening up, rates moving around, and deals needing to close faster than ever.

One thing I’m seeing: more investors leaning heavily on private money and asset-based lending, especially for fix-and-flip and short-term bridge needs.

Curious how others here are approaching it:

• Are you using private lenders more often than traditional banks right now?
• What’s been your experience with speed, flexibility, and leverage?
• Are you finding that asset-based approvals (funding the deal rather than the credit score) are helping you stay competitive?
• For newer investors—what’s been the biggest challenge in getting private money?
• 
• How are you using private money in your deals right now, and what’s been working best for you?

Are you using private lenders more often than traditional banks right now?

What’s been your experience with speed, flexibility, and leverage?

Are you finding that asset-based approvals (funding the deal rather than the credit score) are helping you stay competitive?

For newer investors—what’s been the biggest challenge in getting private money?

How are you using private money in your deals right now, and what’s been working best for you?

Chris Seveney · Answer

I think there's a big myth that dscr and fix and flip loans do not take into account credit. That is a big myth, they absolutely take into account credit score.

Amir Khan · Answer

@Andy Gonzales

• Q Are you using private lenders more often than traditional banks right now?
• 
• >> We only use PMLs.
• 
• What’s been your experience with speed, flexibility, and leverage?
• 
• >> My recent funding with a trusted PML on a performing asset (SFH with first lien position) was funded in 3 days (SPEED), my PMLs understand the risk well as they understand our REI model. They know we offer detailed underwriting on every property and expected built-in equity in each deal (FLEXIBILITY/LEVERAGE)
• 
• 
• Are you finding that asset-based approvals (funding the deal rather than the credit score) are helping you stay competitive?
• 
• >> Our deals are 100% asset-based with our PMLs.
• 
• For newer investors—what’s been the biggest challenge in getting private money?
• 
• >> Newer investors need to get educated in learning the process of marketing, pitching, onboarding and servicing PMLs. 
• 
• How are you using private money in your deals right now, and what’s been working best for you?

• >> Private money drives our entire business model. There is plenty of private money out there. One key resource we use is strategic partnerships with SDIRA custodian companies. We jointly hold educational workshops teaching their clients benefits of private lending using their SDIRA accounts. Some prospects who are not ready, so we offer PML training courses.

Mike Klarman · Answer

I'm always hunting for a real private money lender.  That's someone who is not a "lender" but they have idle capital they'd like to put to work for a streamlined 12%.  1% per month in interest payments.

There's no diff whatsoever in a institutional PML and a HML really.  Same forms, same UW process, often times PML can be more expensive.  Maybe a PML can close a little quicker.

But that true relationship with a private individual who has idle capital that they would like to make interest on, that is so key.  But unless you are sure you can take their money and make 30%+ with it, don't do it cause you have to give them 12% and you wanna make money too so the return will need to be double that, but I would not borrow like this to leverage fix n flips.  Not for one second.  You may be a one and done and blow the entire wad in one deal

Andy Gonzales · Answer

Absolutely — true private money is about relationships with individuals who want a solid return. The key is making sure your deal can generate much more than the interest you pay, or it becomes very risky.

Samuel Awosolu · Answer

Hello Andy,

I can tell you from my prospective as a MLO. The investors I'm working with are tapping into their properties equity with HELOCs to fund their deals. Some of these properties are vested in their LLCs and they are able to max out up to 75% LTV based on credit score. However like you mentioned. Some lenders are tightening up and are requesting personal guarantees with properties vested in LLCs.This is an attractive option because the funds can be used for acquisition and renovation costs for fix and flip deals. When the property sells you can payback the HELOC. Wash rinse and repeat. The rates are a little close to hard money depending on credit score. However with HELOCS you can tap into the funds whenever you need it versus going through an approval process with traditional or asset based lending.

Frankie Vozzi · Answer

Hey Andy! You’ve touched on some really relevant points! In today’s market, many investors are indeed leaning more on private money lending, especially for fix-and-flip projects and short-term needs. The flexibility and speed that private lenders offer can definitely make a big difference. I’d love to hear more about everyone’s experiences with private money and how it’s helping them stay competitive!

Andy Gonzales · Answer

You hit on some really relevant points. In this market, a lot of investors are leaning on private money for fix-and-flips and short-term deals because the speed and flexibility can make or break a deal. I’m really interested to hear how others are structuring their private money, what terms they’re seeing, and how it’s helping them stay competitive in tight situations.

Andy Gonzales · Answer

You’ve clearly built a strong private money system, fast turns, true asset-based approvals, and aligned PMLs who really understand your model. Your SDIRA partnerships and education-first approach are genius for both raising capital and helping newer investors get comfortable with the process.

How Are You All Using Private Money Lending in Today’s Market?

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