If you are a real estate investor, you must have surely heard the terms bridge

money or hard money loans or private money loans more than once. Who are

these private money lenders and how are they different from conventional

lenders or bankers? Are they reliable? Are they safe to work with? Are their

interest rates favourable? Where can you find

them? How do you get the loan?

Unlike conventional financiers, private money

lenders do not belong to any lending institution.

They are individuals who lend money to real estate

investors for foreclosed property investment.

Therefore, their terms and conditions vary from

lender to lender. Anyways, some common terms

you can expect to come across are as follows:

Loan amount covers repair charges too: You

can expect the loan amount to range from 60-70%

of the after repair value (ARV) of the foreclosed property. Let’s say, the

ARV of the foreclosed property in question is $115,000. You can expect a

loan of around 70% of this value, i.e. $ 80,500. If your purchase price is $

60,000 and the estimated repairs cost is $20,000, then your expenses can

be easily covered by the loan amount. What’s more, you can repay the

loan and the interest charges after the property is sold.

High interest rates: When you opt for private money loans, you can expect

higher interest rates when compared to banks and other lending

institutions. The rates may vary between 10-12 % annually and the term

period is also shorter than conventional loans. It may vary from a period

of six to twelve months.

Most private money lenders also charge an additional closing fee for

using their money. This rate commonly ranges between 2-10 points. If

your mortgage amount is $115,000 and the fee is two points, then your

fee amount would ideally be $2,300 (2% of 115,000).

Why private money loans? When you are investing in foreclosed properties,

time is your most valuable asset. All investors want to invest in the “quick

money” formula of foreclosed properties. They are sold on a first-come-first

basis coupled with a “cash-on-sale” clause. It is essential to have your finances

ready when investing in foreclosed properties.

While conventional financiers’ process the loan in about 30-45 days, you can get

a hard money loan within a span of 48 hours or a maximum period of a week.

When you opt for hard money loans, you would not lose a promising property to

another taker for lack of finance. Furthermore, conventional loans fail to cover

the repair and rehab charges.

Yet another benefit of private money loans is that the private money lenders

boast of a

variety of loans, wherein you can choose the one that caters to your needs.

Private money lenders come to your rescue when all other doors are closed for

you. Hundreds of private money lenders with a client eccentric approach are

waiting to serve you. Choose one and take your first step ahead!

Sherman Bridge Lending

4600 Fuller Drive

Suite 200B

Irving, TX 75038

Phone: 866-912-0622

Fax: 817-796-2742

Email: info@shermanbridge.com

Website: http://www.shermanbridge.com