Private Lenders Earn Double Digit Rates Of Return

March 6, 2010 - PRLog -- It used to be fairly easy to get a loan. You called the bank, they pulled your credit report, and you simply waited for them to hand over the money. The bank might also offer credit cards and lines of credit. At least that described my situation on both a personal level and within my business as a real estate investor.

The credit, banking, and mortgage industry took a hit about two years ago. Credit card offers stopped showing up in the mail, banks reduced their ability to borrow, and mortgage companies lost loans as they moved away from adjustable rate mortgages and towards the "safe" fixed rate products. However this brought about a problem. Real estate investors could no longer walk into a bank and easily get a loan. Our lines of credit were diminished and credit cards were canceled. If we could not fund the purchase of a property or pay for the rehab, how could we remain in business? The answer lied with not with the big banks, mortgage, companies, and credit card companies but with individuals. These individuals would come to be called private lenders.

A private lender is an individual with a stash of cash who is either looking or is made aware of how they can make a higher rate of return on their money. In today's market we are looking at 1-2% CD's and a volatile stock market. A real estate investor works alongside a private lender for the purchase of real estate and the rehab of the property. Some real estate investors pay for the rehab of the property while the private lender pays for the purchase. This is known in the industry as having some "skin in the game". For monies invested, the private lender can typically expect a return of 10-12%, although some real estate investors are open to sharing part of the profit in lieu of interest.

What does it take to become a private lender? http://www.private-lenders-wanted.com
An individual who has $5000 or more to invest can qualify to become a private lender, although most real estate investors seek out individuals who are able to offer upwards of $50,000.
How does private money benefit the real estate investor? Real estate investors are able to place cash offers on a property and combined with the ability to close quickly at a title company (a cash offer can literally close within days) and oftentimes get a lower price accepted because it is a cash offer,  this greatly benefits the real estate investor.
How do you become a private lender? Seek out those real estate investors who advertise that they are looking for private lenders. You can find them on Craigslist and Backpage. Meet with the real estate investor and make sure that they provide you with numbers from past properties, before and after pictures, have them explain their purchase criteria as well as marketing  to sell a property. Check out their business via the Better Business Bureau.

Private lending does involve some risk but when you've done your due diligence, researched the company, and analyzed the future investment, the reward can outweigh the risk.

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We buy homes in the fox valley area of Illinois.
http://www.foxvalleypropertysolutions.com

Private lenders welcome.
http://www.private-lenders-wanted.com