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PRIVATE MONEY LOANS FOR REAL ESTATE
Private Lending in Nashville, TN
One of my favorite real estate investing approaches is private lending.
As a private lender, I provide capital to real estate investors for various projects, such as fix and flips, property renovations (rehabs), or acquisitions. This alternative funding method stands in contrast to traditional lending institutions like banks or mortgage companies.
How does it work and why would someone choose to borrow money from a private individual like myself (at a higher interest rate) over a bank or mortgage company?
1. Flexibility
One of the biggest challenges that real estate investors face is funding a purchase of properties to execute their investment strategies. Traditional bank loans can be difficult to obtain, especially for investors with less-than-perfect credit, limited income, or tight timelines. This is where private money loans come in.
2. Speed
Private lending arrangements are usually secured by the property itself and allow for more flexibility and faster access to funds, making them a preferred choice for time-sensitive real estate transactions. But if the property is distressed or needs significant repairs, traditional banks may not finance the deal.
3. Less Underwriting
Strict underwriting requirements of the borrower also often get in the way of a deal. Private money lenders are often more flexible with lending criteria, and may be willing to work with investors who don’t meet traditional bank loan standards.
4. Time Horizon
Finally, private money loans are typically shorter-term loans that banks do not find attracticve, but that investors looking to flip properties or execute short-term investment strategies understand and can use to their advantage.
GET IN TOUCH
If you have an investment property deal in or around the Greater Nashville / Middle Tennessee area that you need funded, get in touch using the button below. I’d love to see if we might be able to work together. I loan on residential single family property, multifamily property, small apartment buildings and very select small commercial buildings.
DEAL SPECIFICS
The specifics of each loan depends on the borrower needs and the deal specifics, but here is generally what to expect if you borrow from me:
Points: 3-4
One point equals 1% of the loan amount. Some or all of these points have to be paid upfront, but you may have the option to roll the points into the back of the loan. If you do, I will increase the loan amount to cover the points.
Fees
You will pay for the inspection and valuation of the subject property, as well as all document, preparation, underwriting, and application fees. These fees will be disclosed to you upfront.
Interest Rates
Depending on past lending relationships with the borrower, overall strength of the deal, including ARV and LTV, as well as the strength of the borrower, count on the interest rate being in the range of 12-14%. All loans are interest-only and balloon in 6-18 months. After that time the entire principal must be repaid.
Amounts
My average deal is about $220,000.00 and ranges from $100K to $350K.
I generally lend up to 75% of the after repair value (ARV) and 100% of the construction costs. If you purchase a property under its ARV (congrats btw), it is possible that I can lend you 100% of the purchase price. Each situation is unique. But you will still be required to pay all closing, underwriting, and all documentation and processing fees discussed earlier.
Prepayment
Not all of my loans have prepayment penalties, but they do have minimum guaranteed interest periods which will be discussed upfront.
Approvals
Approvals are typically granted within 24-48 hours of a completed application. And loans can be funded and close within a few business days.
My Goal
My goal is to be the go-to lender for all your investment projects. I strive for a predictable and frictionless process.
One-off borrowers do happen, but I much prefer dealing with repeat borrowers who come back again and again.
GET IN TOUCH
If you have an investment property deal in or around the Greater Nashville / Middle Tennessee area that you need funded, get in touch using the button below. I’d love to see if we might be able to work together. I loan on residential single family property, multifamily property, small apartment or office buildings and very select unique buildings and properties of importance or significance.
TIME IS MONEY
You might be asking: “Why would someone pay 12-14% when banks are lending (as of today’s writing) at 7%?” It’s because time is money and OPM (other people’s money) is king.
In the time it takes to apply and get documentation together for a bank, you can close a deal, take possession, and get your renovations well underway with a private loan.
Example: Assume a $200,000 purchase price. A private loan @ 13% and 3 points held for 4 months while renovating and selling would cost $3,667 per month ($8,667 + $6,000 / 4).
Getting a traditional mortgage (if the borrower and property would even qualify for one) would take $40,000 for the down payment, and, as of this writing, an additional $1,069 per month for the mortgage payment. That averages to $11.069 per month out of pocket before we even talk about taxes insurance and other holding costs and fees.
Don’t think you can buy a property in Nashville for $200,000? You can — you just aren’t working with a Realtor (like me!) who knows where these properties are just waiting for investors to scoop up.