Why You Should Use Private Money in Real Estate
Categories: Blog Posts
Private money in real estate has its pros and cons. Here’s what you gain from using it.
Private money, other people’s money, real OPM.
Aka… funding from real people, not institutions.
With real other people’s money, there is no box. You create all the terms.
Depending on the individual OPM lender, you can get small gap loans, or large loans for an entire project. Other people’s money can be short-term, long-term; down payments, carry costs; the options are limitless.
Private Money in Real Estate: The Pros
In addition to the total flexibility of other people’s money, here are some other benefits to this style of funding:
- Firstly, it’s great for beginners. You don’t need experience, and you don’t need the qualifications required by most traditional lenders.
- No (or limited) red tape. They won’t check your credit score, income, tax returns, or require an application.
- It’s cheaper. There are almost never fees, and the interest rates are comparable to a bank’s (on the lower end for financing).
- You can close quickly. You don’t have to wait for an appraisal to happen or for an application to be processed. Funding is a phone call away.
- Do any deal. OPM lenders won’t have a box for you to fit in. As long as they get their return, most people could care less what type of property you invest in.
Why Would Someone Give You Private Money in Real Estate?
Is it too good to be true? Why would a random person want to give you their money?
The thing about using real other people’s money is it’s an easy win-win scenario.
People with a lot of cash are always looking for a good place to put it, but:
- Most people don’t want to be in charge of their own real estate investments.
- But, banks have a very low rate of return.
- Also, the stock market is unpredictable. (A good source of real OPM is older individuals who are nearing retirement. Stocks give a good rate of return in the long term, but when someone plans on retiring soon, they’ll be looking for shorter-term stability).
These people are looking for you as much as you’re looking for them. It’s just a matter of attracting (and keeping!) the right people.
Download our free real private money checklist here.
Read the full article here.
Watch the video here: