Last Updated on March 18, 2021
You might be asking yourself what private funding is, right? Well, this is a non -traditional mode of transacting money or finances. The private funding sources are usually the non- banks asset, which is lender based. Their work is to fund a transaction that traditional lenders like banks might not fund in return for debt solution or equity. The work of lenders is to provide the subject with finances to cash flow and collateral in any industry. If the collateral is not available, the other alternative for securing the funding is usually using the profitability of the company so that you can get unsecured financing.
- Private Funding Sources
- Benefits of Private Funding for A Business
Private Funding Sources
You could be thinking about having an investment in real estate, but you lack the funding sources. The good news is that there are a variety of financing solutions more than you can think. Some of the top sources available for private funding for real estates include ;
- Conventional Loans
In this loan, you are supposed to give the down payment first. The bank then gives you the remaining money in return. You provide the lien on that property the mortgage is securing. This loan works best for the buy and hold investors who are building a portfolio through rental properties that are producing income.
- Federal Housing Authority loans
These are the government-sponsored loans that incentivize people so that they can buy homes. This is through borrowing solution. The buyer is only required to make a deposit of 3.5%. It is good to note that the government does not provide a loan with that money. Instead, it guarantees that loan to the lender. On this loan,the lender can get competitive rates of interest.
This loan is like the FHA one. Its main objective is geared towards the homeowners more than the investors. It is usually the owner-occupied. The down loan of 3.5% enables you to get the costs needed for your mortgage rehab.
- Adjustable –Rate Mortgage
Just as the name suggests, the interests of the loan normally fluctuate with the market interest rate. For this option, you will find a lot of variations. However, hybrid ARM has fixed rated within a particular number of years. This is before the transitioning of rates that are adjustable.
Benefits of Private Funding for A Business
Many entrepreneurs are now turning to private lenders to fund their business ideas. Instead of doing it the traditional way, they are looking for deals with private investors. Some of the top benefits from private funding for real estate investors to a business are;
- Increased funding. Although the amount of funding might vary, you will continue receiving more funds, unlike traditional channels.
- There is a short waiting period for your loan to be approved.
- There is equity capital. This is where the lender takes the partial ownership of your company as an exchange of capital.
- The loans get approved easily.
- The investor gets involved in your business to ensure it grows.
As discussed, there are several ways private funding for real estate investors can source their financing. It is important to note that each has its advantages and disadvantages to consider.
Hard Money Lenders IO is a Private Lending Company located in Miami, Florida providing loans to real estate investors and entrepreneurs. We specialize in offering loans to professional real estate investors for their non-owner occupied real estate investments. We operate throughout the state of Florida & have a network of investors nationwide.
Adam Smith has spent the last 5 years in the Private Money Lending world helping real estate investors secure financing for their non-owner occupied real estate investments. When he’s not thinking about real estate, Adam is an avid Jazz music fan and fisherman.