This week I want to give you some of the basics to private lending, focusing on one-on-one relationships, so we can begin to build your foundation of fund raising techniques which will apply for each method described above. Remember, it only takes one investor to set you free.

What is Private Lending?
Private lending refers to a transaction whereby the party that invests the money is an individual or company and is not your typical institutional lender, such as a bank or insurance company. It is basically a loan secured by the real estate. Just like a car loan or a home mortgage only private.
Like a bank, private lenders are prepared to invest with you, after you have found a property, negotiated the price and have put the property under contract. Identical to banks, a private lender must agree to the terms of the money which include loan amount, term, interest and payment terms. Once agreed upon, they will place the investment funds in an escrow account in preparation for the closing. At the closing, the private lender will receive a mortgage security and a document that outlines the terms of the loan, which is secured by the real estate.
What are the advantages of using a Private Lender?
1) Private lenders can move more quickly – most private loans can close much quicker than a bank or institutional investor.
2) Private lenders have no hidden fees – private loans are typically clear cut fixed interest rate, no application fees or points.
3) Private lenders like fixed rate loans – when other investment vehicles are challenged such as the stock market, private investors enjoy the fixed income.
4) Private lenders can fund 100% of purchase price – no banks are going to lend you 100% in today’s market. Loan-to-value is as high as 50%.
5) Private lenders will not run credit checks – there is no board approval, credit scores or nerve racking nights, awaiting the response.
6) Private lenders are much more flexible – once you have established a relationship, private investors are flexible to meet your needs because they see the profit potential.
7) Private lenders don’t require massive paperwork – they are only interested in the recorded mortgage and payments on time.
Bottom line, getting a private investor saves you time and effort, considering the stressful wait one goes through when borrowing from the bank.