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  • Writer's pictureJustin Tahilramani

Becoming the Lender: The Benefits of Lending Private Money

In the world of real estate investing, finding quick and flexible financing options is crucial for success. One such financing tool that has gained popularity among high-net-worth individuals is private money lending secured by real property. Commonly referred to as bridge lending, these loans have emerged as an attractive option for experienced investors that are looking for higher than average returns while protecting their investment in the same way that traditional lenders do - through a first position Deed of Trust. In this blog post, we will explore the benefits of lending private money, and shed light on why high-net-worth individuals should consider putting their money to work through investments backed by real property.

A bridge loan is a short-term lending product that offers a faster and more streamlined funding process compared to conventional lending products available through residential or commercial lenders. Typically lasting between 6 to 24 months, bridge loans provide real estate investors with the necessary funds to finance the purchase and/or renovation of investment properties. Unlike traditional lending institutions, private money lenders focus more on the value of the property being used as collateral, rather than the borrower’s assets and liabilities.

Traditional loans often come with stringent and inflexible underwriting requirements that may restrict real estate investors from being able to take on innovative or value add investment opportunities. This is because lending institutions are not capable of adapting at the speed of the market. As opportunities present themselves, real estate investors need to be able to react in real time. Waiting days or weeks for a lender to review a deal is not a viable option in today’s ultra-competitive market.

Lenders also benefit from offering bridge lending because they can structure terms to suit each deal, taking into consideration the underlying asset and the borrowers experience level. While specific terms vary widely depending upon region, at Sandhills Real Estate Holdings we typically work with lenders that offer terms similar to the following:

  • Loan amounts ranging from $75,000 to $250,000

  • Interest rates between 8% - 11%

  • Interest only or fully amortized repayment options

  • Loan terms ranging from 6 to 24 months

While not for everyone, private money lending offers individuals an opportunity to diversify their investment portfolios while hedging against risk. If you or someone you know is looking to put their money to work, consider reaching out to us at Sandhills Real Estate Holdings to see how we can build wealth together.

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