5 Reasons Why Investors Choose Private Money Lenders
You did your due diligence: you researched neighborhoods, found a profitable investment property, and now you’re ready to move forward. But what do you do, borrow from a bank or private lender? In most cases, relying on conventional lenders isn’t ideal and may not be right for you. Let’s discuss why getting a private loan for the next investment property might be a better option for you.
Reason #1 Speed: quick turnaround on loan approvals
Traditional lenders take around 60 days or more to process and approve a loan request. Two months is a lot of time, especially when you need funding fast to close your deal. Since real estate is a highly competitive market, you could lose the investment opportunity to other bidders if you’re not getting funding fast enough. Private lenders, on the other hand, understand that time is precious and generally take up to 10 days to give you a loan.
Companies like Apollo Square Capital, that specialize in residential lending, understand how real estate investing works. They know that buying and rehabbing properties as fast as possible is essential for investors’ bottomline. That’s why they focus on getting you the money you need as fast as possible.
Reason #2 Built for house flippers
Many conventional lenders frown upon flipping homes. They perceive fix-and-flip deals as riskier than owner-occupied ones and therefore, less likely to give you the loan. Private lenders, however, have dedicated fix-and-flip loan programs for non-owner occupied properties to fit your exact needs.
Reason #3 Flexibility
Banks have pretty rigid lending guidelines and basically use the “one size fits all” approach. This makes traditional loans rather challenging to acquire. Luckily, private lenders are way more flexible than traditional institutions when it comes to loan terms, and are willing to tailor loans to the inventor’s specific needs. Since each real estate investment project is different, private money lenders take this into consideration and work with investors to best help them succeed.
Reason #4 Limited documentation and less paperwork
If you want to get a loan from a conventional lender, you’ll need to provide a lot of documentation. Gathering everything can be a hassle, time-consuming and really invasive process. Think about it: when you find an awesome deal on an investment property, all that you need for turning a profit is to quickly apply and acquire financing. A good private lender will ask only for the documentation that is necessary and won’t ask for your tax returns or W-2s. For example, Apollo Square Capital only asks you to upload (online, so that the process is fast and easy) a 2-month bank statement.
Paperwork-wise, traditional lenders have you reading and signing mountains of pages, which is boring, tedious, and a waste of time. When you need financing for an investment deal, there’s no time to lose – nothing should slow you down. Private money lenders understand this and have an efficient, streamlined process from beginning to end. There are considerably fewer documents to sign and you’ll get the money quickly, with no hassle.
Reason #5 No prepayment penalties for 1-year loans
If you borrow money from a bank and decide to pay down all or some of your loan earlier than the set term, the bank will charge you a prepayment penalty. This means that you won’t be able to save on interest, and you might end up spending more, as a ‘punishment’ for paying off a loan ahead of schedule. Silly and frustrating, right? Well, here’s the good news: most private lenders don’t charge prepayment penalties for 1-year loans, so if you want to pay down your loan before the deadline, save on interest and have peace of mind, you can easily do so.
Apollo Square Capital is a private lender that offers real estate investors a complete set of financing options for all their investment goals. With different loan programs, a simple and efficient process, as well as a professional team with decades of industry experience, the company is a one-stop-shop for all your investment lending needs.