The Benefits of Peer to Peer Lending

As a real estate investor it is important to understand not only what peer to peer lending is, but more importantly, the benefits that are available from using this type of leverage. Peer to peer lending, also known as other people’s money, is funding that is provided by family, friends, or individuals within the community to help you in your investments. Here at The Cash Flow Company, we have done about a billion dollars over the past 23 years using peer to peer lending. The majority of this money is not from family and friends, but instead from other people who are interested in making a good return. Today we are going to look at the benefits of peer to peer lending, and why it is often better than traditional loans.

Peer to peer is replacing banks.

We all know what is happening out there with affordability. The banks are starting to change their requirements, DSCR is getting into the 9% and 10% range, and fix and flip loans are anywhere between 11% and 13%. This lending squeeze is causing affordability, terms, and credit score requirements to all become tougher as well. Which creates the perfect opportunity to reintroduce peer to peer lending, which is something that has been around since before banking began. Peer to peer lending is taking out the banks and allowing people to begin working with humans again.

Peer to peer gets deals done quickly.

Every good investor always has a few peer to peer lenders that they work with on a regular basis. These are individuals that the investors have built a good reputation with, and proved that they can produce quality work. By creating this foundation, it allows investors to act quickly on deals that come available instead of waiting for the bank’s approval. Peer to peer lenders also benefit because they are able to use money from their savings accounts or retirement accounts in order to get a better return that is something secured. It’s a great win-win situation for everyone!

Peer to peer keeps things simple.

We want to keep it simple and find the people that fit your needs. Not everyone needs $300K or $500K. They might just need $35K or $50K to get their business going. While they do have real estate to secure a loan, they might not have the income that the bank requires. That is where peer to peer lending comes in. Most peer to peer lenders don’t care what your income is. They want to know what the property looks like, if it will protect their money, and what you are going to pay them. Another way to look at peer to peer lending is like a personal DSCR. A DSCR doesn’t care about your income either. With the high interest rates of DSCR in this market, peer to peer lending is a comparable option for investors with rental properties.

Double your money!

Peer to peer is so important for those who are lending. They can easily make $8K on $100K. Banks on the other hand, would only have a return of $4K to $5K on the same amount if it were in a CD or savings account. Peer to peer lenders could easily double what they are making without having to worry about the inconsistency of the stock market. This is a time when things are tightening and people are having to look for new opportunities. Those who are prepared, ready, and have money, will succeed.

Where do you start? We can help!

Every investor or business owner should look into peer to peer lending. Even if it is just for a down payment, fix up cost, or any other expense in the real estate world. Businesses could also benefit from peer to peer lending for start up costs or unexpected business expenses. It doesn’t have to be $500K, but it could be! With lending becoming tighter, banks could require an additional 10%. In that case, where would you go for the additional money? The answer is peer to peer! There are all kinds of people out there with pockets full of money. You just need to find one that has what you are needing.

If you want to find out more about peer to peer lending and how to get started reach out to us. We want to make sure that this market grows and that we get rid of some of the lenders and bankers out there. The better it grows, the bigger it grows, and the more options people will have for their future. Our target is to make it a win-win for both peer to peer borrowers and peer to peer lenders.

Contact us today to find out more about the lowest risk lending option with the best return!

Watch our most recent video explaining What is Peer to Peer Lending and Why You Need It

We have created an excellent resource site for you to discover more about peer to peer lending. This information can be found at www.TheNoteShop.com.

Busting Myths: How Hard Money Can Be Cheaper Than Banks

Let’s keep busting hard money myths and talk about how hard money can be cheaper than banks.

But, first, in case you missed our other hard money myth busting videos, check them out on our YouTube channel!

So far, we’ve busted common myths like “Hard money is too expensive,” and “Hard money is a trap.”

Now, let’s look at another common misconception about hard money:

“Bank lines are cheaper than hard money.”

Okay, on the surface, bank loans are cheaper. Yes, that part is technically true.

However, when you scratch below the surface, you’ll discover hard money can be cheaper. All because of one important factor that doesn’t get calculated into the equation at the start of a loan:

Timing.

Think about how long it can take to close a bank loan. You might get lucky and close within 30 days, but it often takes longer. Sometimes MUCH longer.

Hard money, on the other hand, moves much, much faster. You can usually close within two weeks, but it can be even faster. Some lenders can close in just a few days. When you close faster, you can get to work faster…which means you can complete your project faster. Faster projects mean more money in your pocket.

Another timing issue real estate investors fail to consider: The amount of time it takes to fund escrow.

AKA, your rehab.

If it takes longer to access those funds, then it’ll take longer to pay your contractor. And if your contractor isn’t paid quickly enough, they might move on to another value-add property project.

Not only does it take banks longer to approve escrow funds, but they have stricter guidelines. Let’s look at an example:

You want to withdraw $10,000 from your escrow account to pay your electrician. But when you get the invoice from your electrician, you realize you only needed $8,000.

However, your plumber suddenly also needs to be paid $2,000.

Unfortunately, the bank won’t care about your plumber. They’ll send you only what you need to pay your electrician since that’s what you originally asked for.

You’ll have to waste precious time sending in another request for the $2,000. Within that time, your plumber might take off and find a different project. They can’t wait around for you to pay them so they can complete their work.

That means you have to search for a new plumber…which means you waste time.

And time is money!

Hard money lenders respect that.

Most of them focus on moving fast, being flexible, and working with you to get you through your project as quickly as possible so you can tackle your next real estate deal.

So, there you have it. In the long the run, hard money can be cheaper than banks.

Again, it all comes down to timing. And, again, time is money in real estate investing.

Stay tuned for our next video where we talk about the biggest and most misleading myth of all:

Hard money is a curse.

Ready to chat about your hard money and other lending options? Great! Our team is excited to set you on a path that makes you the kind of money you need…to live the life you want.

Happy investing!

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