Private money lenders advice please!

[Justin Gottuso]

Hey 👋 I’m looking into private Monday lending options. The rates on being quoted are 5% interest. Seems like a much quicker process than conventional loans since funding is in 3 to 5 days. No property appraisals required that slow things down. No down payment requires so can fund 100% of the deal.

I am also in the process of also getting a credit line on my existing properties to cover earnest money deposit, repairs and emergency fund. It’s a process of using credit line to lock up a property. Private lending for the cash to close and rehab funds, close in about seven days total. Then already have funds for rehab to get started immediately, no draws from the contractor to the lender, just have the cash ready to go. Credit line can also help cover the gaps in monthly payments for the private lender while property/unit is being rehabbed. My properties were paid for in cash and have great cash flow so they can cover the credit line payments.

Also larger institutional private lenders like Lending One has rates in the 8-9% interest range for more short term loans and a lot more requirements and hoops to jump through. The rates are a little lower for longer fixed rate loans but not by much, mid 4% range. So that small difference in interest-rate percentage between individual vs institutional private lenders is a small difference but I think the speed of the individual private lenders is a BIG advantage for me since I want to scale quickly and get lots of great deals coming my way from my network.

A downside at this point for the individual private lenders is not having pre-existing relationships with them. More risk sense they might not have a website or the basic business kind of things that build trust with clients. Don’t wanna get scammed LOL What do you think about this strategy and the points I’ve laid out? Thanks so much!