About Private Mortgage Money Lending

What is the difference between private lenders and hard money lenders?

August 11, 2022 by Kyle Sennott Leave a Comment

Difference Between Hard Money Lenders and Private Lenders

Albert Einstein once said: “If you cannot explain it simply, you don’t understand it fully.” This is what I typically think when we get a phone call where a caller wants to know if we are a private lender or a hard money lender. “What’s the difference?” I ask and typically get a rambling explanation that is difficult to follow. It has something to do with institutional money, asset-based lending, credit profile, and what-not and, needless to say, makes no sense whatsoever. So what is the difference between hard money lenders and private lenders? I would argue very little.

The Role of Reserves in Private Lending

May 16, 2022 by Kyle Sennott Leave a Comment

Reserves are money left at the borrower’s disposal after they’ve made the required contribution towards the transaction.

Another requirement of any lender with sound underwriting standards is adequate reserves. Reserves are money left in the borrower’s disposal after they’ve made the required contribution towards the transaction. We often run into potential borrowers who are ready to go “all in” and invest their last dime in their fix-and-flip transaction. They effectively become a ticking time bomb ready to default on their obligations to their lender, their state, or their other creditors. Even worse, they are putting themselves in an unfortunate position where, instead of making money, they can lose it.

How to Work with Private Lenders Effectively

February 12, 2021 by Kyle Sennott Leave a Comment

Businessman Connects A Small Red Gear To A Large Gear Wheel Symbolism Of Establishing Business Processes And Communication Increase Efficiency And Productivity The Best Business Formula For Success — To effectively work with private lenders, follow these five steps to success.

Much of the advice on private money loans are focused on how to get qualified for them. While it’s certainly an essential topic, an equally important subject is how to ensure your success once you obtained that funding. So, how to work with private lenders to ensure your success? Let’s face it – your ultimate goal as an investor is to maximize your profits. Repaying your private money loan as quickly as possible is a necessary milestone in meeting such a goal. By moving through your rehab efficiently, you can save thousands of dollars. In contrast, every additional month your loan is outstanding will cost you a pretty penny in carrying costs such as interest payments, taxes, and insurance. If you fail to repay a loan within a term agreed (typically twelve months), you might also incur default fees and interest. All of them would take an additional chunk out of your profits.

How Private Money Lenders Are Different

December 7, 2017 by Kyle Sennott Leave a Comment

What are private money lenders and how are they different from banks and credit unions? Today, we examine the basics of private money rehab loans and how they can help you compete with cash buyers, lower your cost of funds and leverage your existing capital to take your business to the next level.

Private rehab loans are very different from traditional mortgage programs offered by banks and credit unions. When you purchase a home to live in, you’re applying for mortgage products specifically designed for consumers. As such, they are strictly regulated. Lenders have strict rules and requirements when it comes to origination, underwriting, servicing such loans. In addition, to free up the capital most lenders sell off the originated loans to larger institutions such as Fannie Mae or Freddie Mac. That means that those consumer loans need to comply with the underwriting criteria of those institutions as well. All these factors limit how bank view risk and what kind of loans they can offer to consumers.

Private Money Lenders and the Power of Leverage

November 20, 2017 by Kyle Sennott Leave a Comment

As a private money lender, we work with a wide spectrum of clients: from those who are just starting out in the rehab business to borrowers with substantial experience and funds of their own. It’s self-explanatory why someone with only modest savings needs to work with a private mortgage lender. However, why would someone use them if their have enough cash of their own? The answer, my friends, is leverage. This article is a continuation of our series on hard money calculators, so if you need a refresher on the basics, please click here.

Working With A Private Money Lender: What NOT To Do

April 5, 2017 by Kyle Sennott Leave a Comment

Many of our previous blogs focused on things you should be doing to succeed as a real estate investor. For example, we shared our perspective as a private money lender on how to get real estate deals and how to build a real estate investing team that will propel you forward. We talked about what it takes to be a rehabber and what you need to do to minimize your risk. However, what’s equally important is to know what NOT to do in order to succeed.

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