Have you always wanted to get into real estate? Working with private lenders is a great way to invest in Chicago. In this post, we will provide you with the information you need to decide if working with a private lender is the right choice for you!
Investing in Chicago real estate can be extremely beneficial. However, going through a traditional bank isn’t always an ideal option. The red-tape and requirements for borrowers can be extreme at times. Things can be much different when working with a private lender to finance your property in Chicago. If you are interested in working with a private lender, here’s what you need to know.
What Is A Private Lender?
If you’re like most people, you don’t have hundreds of thousands of dollars just laying around for real estate investments. A private lender in Chicago is someone who can help to finance 100% of your deals and rehab costs. Using other people’s money is nothing new. It’s how some millionaires have achieved success for years and years. A private loan is great for properties that need to be purchased right away, especially when the buyer doesn’t have the required 20% down or when they don’t have the time to wait for a conventional loan to go through.
But the perks aren’t just for you. When someone does have a large sum of money lying around, doesn’t it make sense to make short-term loans in exchange for returns upward of 10%? By avoiding banks, their fees, and their red-tape, both private lenders and investors will come out ahead.
How Private Lenders Work
When you work with a private lender in Chicago, your credit score isn’t as important as your investment history. You’ll need to be able to prove that investing in your success is a smart decision. If you don’t have any deals under your belt, you can either borrow from someone who already knows and trusts you, or work with a traditional bank on your first deal or two. When working with a private lender in Chicago, you can expect to pay anywhere from 4-12% in interest. This amount is negotiable and will vary based on your track record, the terms of the loan, and the amount you wish to borrow.
When Working With A Private Lender Makes Sense
Working with a private lender isn’t the right option for every property and situation. For investors and people looking to fix and flip or invest, a private lender can be a great idea. The process of securing private money is usually much faster than getting through all of the red-tape with a bank. Hard money is ideal for those looking to keep a property for a short amount of time, while quickly making improvements to increase the property’s value. They are then able to sell the property at a higher price, pay the loan off, and walk away with a nice profit. However, if you are a private buyer, looking for a home of your own, you may want to check with your bank first.
What’s Required Of You
Your requirements and terms of the deal will vary greatly from lender to lender. People that already know you and know what you can do may be willing to lend more easily whereas someone not familiar with your work ethic or ability to turn a profit may be more apprehensive about handing over a six-figure check. To secure a loan with confidence, you will need to be able to provide a comprehensive plan for how the money will be used, the profit you expect to generate and when, a deed of trust, and a down payment on the loan. In many cases, you will need to use the property as collateral in case you aren’t able to pay the loan back as promised.
How To Find A Private Lender In Chicago
There are a number of ways to find private lenders in Chicago. You can tap into your existing network, especially if you have a lot of friends in the real estate industry. Agents and mortgage brokers are a great place to start. You can also reach out to people online through real estate forums, networking groups, and LinkedIn.
You can choose to work with a private lending company or an individual lender. A few of the more popular private lending companies include LendingClub, Avant, and FreedomPlus. When working with an individual private lender, you’ll have the ability to form a strong connection and working relationship, coming together on incredible deals for years to come.
Working with private lenders is a great option for those who want to invest in Chicago real estate but lack the funds to buy directly. Using other people’s money will help you take your investment career to the next level, generating wealth for you and your family for years to come.