What is private money? Private money is money available from other sources of traditional lending. i.e. banks, credit cards, brokerage houses, insurance companies.

Anyone can be a private lender and anyone can receive money from a private lender. For our uses, a private money lender is anyone who loans money for the purposes of investing in real estate for buying, repairing, refinancing property. The money is secured by a mortgage or lien on the real estate and subject to a promissory note with stated terms.

The benefits of using a private money lender are numerous. The top three reasons are that private money does not require personal money, a job, or any credit.

You are the one negotiating with the private money lender, so what ever terms you can arrange with the lender is up to you. You control the negotiations. There is also no limit to how much you can use on one project.

Typically, private money is one of the cheaper forms of credit. There are no closing costs, or costs associated with a credit check, and the interest rate you negotiate can be lower than conventional rates, and hard money!

Having a source of cash allows you to make offers and buy quickly. Heard of being able to close in seven days?

Lastly, on the credit side, there are no lender "seasoning" issues, and your credit is preserved because you don't get the credit checks. You can also run your investments through your entities because banks are typically hesitant to make loans to property held in an entity.

Private money is a key strategy for American investors in real estate online. Your ability to meet and connect with lenders and set them up to have funds available for your deals will be part of what separates the successful from the strugglers. Start talking to people everywhere. You never know who has $10,000 hidden under the mattress!

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