By Brian Adams
Given the current economic climate, doing real estate deals presents greater challenges than before. One such challenge is having the cash to close just about any real estate deal. Traditional sources of funding are harder to come by, especially for those who have a less-than-stellar credit history. If you don’t have the money on hand to close the deal, chances are the deal will fall through.
Private money provides a way to obtain funding for real estate deals, maneuver through the closing process and make a favorable profit and return on investment. There are plenty of good reasons why you need private money to close real estate deals. Here are five advantages of using private money that a real estate investor should consider when doing their next deal:
- Credit worthiness is not a barrier to approval. Loans from banks and other financial institutions depend on your credit worthiness, requiring a minimum credit score before authorizing any loans. Most non-traditional and informal sources of financing usually lend money on the merits of the deal in question and not your current credit standing.
Gathering financial documents such as bank statements and paycheck stubs can be a lengthy and cumbersome task that can prolong the process of obtaining critical funding. The informal nature of private money usually means bypassing these requirements.
Depending on the circumstances, it usually takes less time to be approved for private financing than for traditional loans. In most cases, it can take between 45 to 60 days or longer for a traditional loan to be approved. In contrast, a private money loan can be obtained in just a few days.
Having access to private money allows you to make all-cash offers while others have to resort to a mortgage or other type of traditional loan. This means you can take advantage of bargains and close in a matter of days, beating your competition to great deals.
As a real estate investor backed by private money, you have far greater control over the deal. Ultimately, you set the terms of the deal, not the lending institution. Also, you can avoid expensive fees using private money. For instance, most financial institutions penalize you for paying off the loan in advance.
Relying on private money for your next real estate deal can save you plenty of headaches. Instead of worrying about the fine print on traditional loans and not having control over the deal, you can proceed with your real estate investments without having to worry about common roadblocks and setbacks.
About the Author
Brian K. Adams is a practicing Certified Public Accountant (CPA) and has specialized in real estate taxation and forensic accounting. Mr. Adams is an active real estate investor and works to identify real estate investment opportunities for a diverse group of investors. Mr. Adams founded Adams Investor Group, LLC (www.adamsinvestorgroup.com), a company dedicated to the acquisition and management of commercial and residential real estate investments. Mr. Adams takes great personal pride in his ability to analyze potential opportunities from a fiscally responsible position and understands the varying business priorities that are important to investors today. Brian has experience using private money for real estate deals and wrote an informative eBook on “How to Locate and Secure Private Money From Investors.” To learn more, visit www.PrivateMoneyandYou.com.