In the real estate financing industry, private money refers to the funds an individual or organization invests with a real estate entrepreneur in exchange for a return on the investment. While a private money loan can take place when friends and family lend you money for your start up business, it most commonly originates from a financial institution. These institutions use the money of private investors to service loans to real estate entrepreneurs. In this case, the financial institution receives a promissory note —a mortgage on the property to secure the investment— and collects an interest on the loan. The real estate investor can make interest only or amortized monthly payments over a term agreed upon by the investor with unlimited options to renew —whichever works best for the deal.
The primary benefit of private money is that it allows you to do more deals. Many real estate investors struggle with other sources of money such as conventional mortgages and lines of credit. For experienced investors, private money is useful to close larger deals with a higher estimated profit margin. In today’s real estate market, private money is the key to completing multiple transactions. There has never been a better time and a better way to boost your investments than with private money. It doesn’t matter what strategy you use for your investments; whether you want to buy and hold or fix and flip, using a private money loan can be a huge investment opportunity to propel your investing to the next level.
At Hanson Capital Group, we’re more than just a private money lender. From our trusted network of business associates to our abundance of experience in the investment industry, we can help you turn a run-of-the-mill deal into an investment steal.