Private money is a major reason behind successful property flipping. When it comes to flipper, a lot of homeowners depend on hard money and private lenders. If you read about real estate investors who have flipped homes, you will see the presence of private funds. This is a recurring theme most real estate flippers wish to explore and discuss about. So, why is private money good for flipping? It is mainly because investors fund projects quickly and use very little of their own cash. The only issue with private money is that you should spend some time hunting for it!
As you browse through the internet, you will come across many private money lenders. The chances of spotting a reliable lender in google is very less. Many firms that claim to be private money lenders are not real. Hard money lenders are meant to be established companies that borrow funds from investors and lend cash to flippers. Hard money lenders fund flipper at high rates of interest. The rates begin at 12% and increase steeply.
Where is all the money?
Real private money hails from individuals who have lots of money and are ready to lend. It can come from family members, business partners, real estate investors or anyone with some extra cash. The process of asking for private money will not be easy. However, if you find the right source, you can do wonders!
With all this being said, why is private money very helpful and important for flipping properties? First of all, local banks will not fund you for flipping. Though traditional banks charge an interest of 5.35%, they don’t fund everyone. Financing is considered as a cheap act for flipping. This is why you should go for private money lenders. If you wish to get several lines of credit, you must opt for private money. Imagine this situation: you have a rental property and an equity on your prime home. You will be able to gain credit for both these properties by flipping.
Some homeowners rely only on private funds for flipping. When you purchase properties at a foreclosure auction, you will require immediate cash. Traditional money lenders and banks will not process your application quickly. On the other hand, private money lenders will make sure you get the cash in few hours. They work with flexible terms that ensure quick money.