Benefits of Private Money Lending to Real Estate Investors
Among the many types of real estate investments is private money lending. It comes with lots of fascinating benefits. In case you are looking forward to broadening your investment muscles in the real estate industry, and your goal is not to be a property owner, you can venture into private money lending.
Ideally, private money lending is a financing option for real estate investors. It provides financial support to those investors who want to lend funds for real estate investment. The investor may be looking for finances to complete their project, such as extensive development, rehabilitation facility, rehab, and so forth. Whether investing as an individual or a company, these funds are aimed at the profit-based property. Thus, lend money from private money investors. If you are a private money lender, you serve the same purpose as a bank. Real estate developers will borrow money from you, once you lend them and their project is complete, they pay you an annual rate of return. Private money lending is currently gaining popularity due to the many benefits it offers.
Essentially, known to be the most passive investment option there is for real estate investors, private money lending will not require you to take part in the project. Once you have provided your lending terms and conditions, a quote, and finalize the financing, you sit and earn your entitled monthly payouts.
Do you want to enjoy high cash flows? Then private money lending may be the perfect deal. It is the top leading among all real estate investments. Statistics indicate that it gives the lender the highest figures in cash flow. Some data that was collected by researchers showed that you could earn as high as 10.5% annual returns on a single project. Note, the payment of the financial return starts once the project is financed. If this does not convince you enough to try this investment, you can opt to channel your money in other projects that will earn you the same rate of interest. It is an alternative considered by a majority of investors, as long as they have analyzed the project and are sure of making good earnings one they roll their funds in it.
Private money lending is one of the safest methods to invest. Think of it, you are the bank, and as these institutions operate, the risks involved are minimal. The investment is retained in the equity account up to the time the project will be funded entirely. That takes like 60 days, after which you start earning the monthly payouts at the interest rated that had been decided in advance. Thus, you need not worry about the effects of the stock market affecting your earnings.
What is even more encouraging in this investment option is that the real property acts as the collateral. Private money lenders have peace of mind as they know the investment is protected through real property. Nothing will leave you at peace, like the assurance that your money is backed up by an actual asset. Thus, chances of a real estate developer defaulting to repay are minimal, which makes this investment viable.