Private Money Lenders

[Daniel Rodriguez]

Hello all!

Does anyone have any recommendations for private money lenders they have worked with in the past? Looking to fund some rehab work in a SFH, as well as a purchase + rehab. Thanks in advance for any suggestions!

[Alex Breshears]

Hi Daniel!  As a private lender, I just wanted to make you aware of some ambiguous terms around lending, with private lender being one of them. In my eyes, a private lender is an individual (or their business entity) that lends out capital on non-owner occupied homes. There is a push in the industry for hard money lenders to now coin themselves private lenders. While frankly I don't care about the terminology, what I do care about is the expectations and the experience a borrower is going to have. When borrowers are talking to my definition of a private lender - you are talking to the decision maker. We do the underwriting, we look at what we find as acceptable risk, and we can say yes or no. Our capital doesn't come with strings attached.  Hard money lenders are great, not trying to vilify them, but they are a different tool entirely that what I do.  The reason I bring this up is that if you are looking for just downpayment and rehab funds, but want to get a 1st lien from a hard money lender, I would vote about 90% of the time they will not allow a junior lien (which is what I would fund as a private lender since I'm one of the few that does seconds).  So in reality, what it sounds like you need is a hard money lender that can do a pretty high loan to cost loan and then fund up to 100% pf the rehab. If you find this, make sure you ask about their draw model. Most lenders (especially right now) are going to want to see you have your own capital in the deal, and also you will be funding a portion of your rehab with your own money, and then put in to be refunded for the repairs already paid for, with the lender. This is termed a construction holdback or construction draw.  Make sure you understand what that process is so you can plan effectively to renovate in the timeline they are working with.