Skip links

Benefits of Private Money Lending

  • Home
  • Blog
  • Benefits of Private Money Lending
A lender handing over a private money loan to a preoperty investor - ECF

Efficient and reliable access to capital is a must for every successful real estate investor. The market has grown increasingly competitive over the last few years, making it even more essential to avoid any delays when attempting to purchase a promising investment property. The issue is conventional sources of capital such as traditional banks can take several weeks or months to underwrite a money loan, making them an incompatible financing option when the real estate market dynamics demand fast closings. 

That’s where Express Capital Financing’s (ECF) streamlined underwriting approach and extensive lending experience come into play filling the funding gap vacated by traditional lenders and providing investors with the resources they need to buy and sell properties at competitive rates to maximize cashflow. Here’s a quick look at some of the key advantages of private money (also called ‘hard money‘) loans and how you can leverage these benefits to grow and scale your investment business.

Advantages of a Private Loan

Traditional lending institutions like banks and credit unions typically do not offer traditional loans for distressed properties that require major renovations. That presents an issue for fix-and-flip investors looking to buy rundown homes and resell them after making significant upgrades. 

That’s where a private money lender like Express Capital Financing comes into play. We specialize in creating customized lending programs specifically geared for fix-and-flip investing. The financial experts at ECF offer clients optimal leverage by focusing on the after-repair-value (ARV) of the real estate asset during the loan application and underwriting process as opposed to its present purchase price. The ARV is the projected real estate market valuation of a distressed property post renovation. The planned property renovations, such as adding additional square footage, modifying the floorplan or upgrading fixtures, are all taken into account by a certified appraiser and then compared to similar properties in the area to determine what the property can be sold for in the future. 

The ARV approach to underwriting gives real estate investors a distinct advantage. Because the ARV value of a property is significantly more than the present value, investors can qualify for a higher private money loan amount by partnering with ECF as opposed to a conventional lender.

A piggy bank next to a calculator - ECF

Flexible Loan Terms

Private money loans are a form of collateral lending that are primarily based on the potential of the investment asset to generate a profit in the future. That means private money lenders do not focus on an investor’s credit score or financial record when evaluating a loan application. Instead, they adopt a more holistic approach when it comes to determining what projects they will support. With years of experience assisting commercial real estate investors successfully complete investments of all sizes, the Express Capital Financing team knows the elements of a promising investment and are willing to work with investors to create a viable financing plan to make it work. This inherent flexibility makes it possible for investors who would otherwise be unable to qualify for a traditional loan due to a poor credit history or other factors, to gain access to the capital they need to fund their business operations.

Quick Access to Funding

You simply cannot put a price on efficiency in the real estate investment industry. The main reason traditional financial institutions simply cannot match private money lenders when it comes to the real estate investment industry is that private lenders can close on properties in a fraction of the time that it takes banks to process conventional loans.

The current market is extremely competitive, meaning sellers want to close as fast as possible with minimal delays. While all-cash offers are the best-case scenario, private lender loans are the most effective alternative. With Express Capital Financing’s streamlined underwriting process, we can get you the capital you need to close on a property in a matter of days as opposed to the weeks or even months that it would take a bank – giving you a major leg-up on the competition.

Get Started Today!

At Express Capital Financing our advisors engage in a solutions-focused, consultative approach. We understand each client’s specific needs and goals and present the best approach to satisfy the client’s requirements. ECF possesses a unique market knowledge that is critical in today’s complex and volatile real estate market.

Contact us today to learn more about how we can help you achieve all of your investment goals!

FAQ

Private money lending is a great alternative for those looking for financing with more flexible terms than traditional banks may provide. Private money lenders are individuals, private companies, or organizations that lend money to borrowers who need short-term financing or have difficulty qualifying for traditional bank loans.

A private money lender typically offers higher interest rates and shorter repayment periods than those offered by banks, but they also have less stringent requirements for approval. This makes it ideal for those looking to invest in rental property and other commercial property interests.

Private lending is a form of financing that involves borrowing money from individuals or organizations rather than banks. Private lenders may include family, friends, and even strangers who are willing to lend money to borrowers in need of capital for a variety of reasons.

Private money lending can provide a number of benefits over traditional forms of financing, including more flexibility in terms, faster approval times, and access to capital when other forms of financing are not available. The two most common types of private lending are hard money loans and bridge loans.

When structuring a private money loan, it’s important to consider several factors, such as the borrower’s credit score, the loan-to-value ratio, and the intended use of the loan proceeds. Additionally, it’s important to ensure that all parties involved are aware of their rights and responsibilities under the terms of the loan agreement.

Private money lending is a viable option for borrowers who are looking to access capital quickly and without the stringent requirements of traditional lenders, such as banks or other financial institutions. However, it comes with certain risks that all potential borrowers should understand before moving forward.

The main risk associated with private money lending lies with the lender themselves. In most cases, private money lenders are not regulated by any government agency and may not have the same safety nets in place as more traditional lenders. Therefore, it’s important to do your research and make sure that you are dealing with a reputable lender before  proceeding with the loan. Additionally, it’s important to make sure that all the terms of the loan are clearly outlined in the agreement so both parties know exactly what they are getting into.

Private money lenders look for several key factors when assessing a loan request. The most important factor is the borrower’s ability to repay the loan. Private money lenders generally require borrowers to provide proof of income, assets, and credit history in order to demonstrate their capability to make timely payments. Additionally, private money lenders commonly require borrowers to provide collateral or some form of security when taking out a loan . The value of the collateral typically depends on the amount of the loan and the lender’s risk tolerance.

Join Our Mailing List

Subscription Form (#7)
Don't miss out on the latest trends, insights, and opportunities in real estate financing. By subscribing, you'll be the first to know about new loan programs, market trends, and valuable resources that can give you a competitive edge.

Latest Posts

Benefits Of Commercial Real Estate Loans

There are many ways that you can go about growing your assets for the future.…

How To Avoid The Most Common Financing Mistakes

It is easy to make financing mistakes when searching for a loan to help grow…

What are Lite Doc Loans?

In today’s fast-paced market, traditional financing can often feel like a roadblock, with extensive paperwork…

This website uses cookies to improve your web experience.