What is Private Lending?
What is Private Lending?Private lending refers to borrowing money from a group of investors or from an individual investor; this loan is not a bank loan from a traditional investor. Real estate buyers use private money lenders such as JCAP Private Lending to finance deals which can do not qualify for traditional loan. Loan which we specialize in include asset based loans used to fund real estate transactions, and many more. Given that banks are not able to fund these types of loans, private investors come to JCAP to help fund these specialty loans (or non-traditional loans). How Does Private Money Lending Differ From Hard Money Lending?Let’s start off by saying both types of lending strategies are great and should be part of an investors toolbox but they have key differences which we will highlight. Private lending provides a means for investors to invest capital in your project. An example of private money lending would be if a friend or family member who was interest in your project proposal and would like a share in that investment.Hard money lending is funded between both the bank and private investors. What Are The Advantages of Private Money Lending?As Nasdaq accurately stated, private money loans are ideal for investors who want to purchase a property which needs repairs.Traditional loans often refuse to grant mortgage loans for properties that have been vandalized or seriously damaged. Investors on the other hand see the potential in a property. These properties can be purchased at a low price and fixed to be resold at a profitable rate. You can think of this as a loan to flip a house or property.Traditional loans such as ones granted by a bank focus on the borrower’s financial and credit history. Private investors focus on the properties profitability or as a business transaction. Furthermore, private money loans can be granted relatively fast, whereas conventional loans may need over 45 days to process.