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Private Funding May Be Your Pathway Into Real Estate Investing

16 June 2023

Mathéo Gerard

In recent years, there has been an increasing drive toward real estate investing. However, while the success of this venture is undeniable, what has been left out of the conversation is that this process is not exactly easy, especially when it comes to gaining capital to purchase these properties. Private real estate financing provides a route toward purchasing that is often easier than the traditional financial institution pathway.

Practical Credit Terms

With large financial institutions, credit is often a hard stop on approval. To qualify for a variety of mortgage options, applicants must have a minimum credit score. The rest of the applicant's financial profile does not matter; their application will be denied automatically. Private lending is more about collateral than credit, in that applicants can use the property as collateral in lieu of a required credit score. As a result, it is often easier to gain approval. 

Faster Loan Processing

Real estate investing is a very competitive marketplace. Often, large firms have the funds to purchase properties almost as quickly as they hit the market. When dealing with a traditional blank, even gaining pre-approval can take quite some time. Private firms have far fewer channels for applicants to process through, which allows them to gain approval faster and remain competitive on their journey to maximize their real estate portfolio.  

Variable Terms

Since large banks also deal with a large pool of customers, they tend to have standardized loan terms that require a one-size-fits-all approach. However, in the same way, no two people are the same, they may not have the same needs when it comes to loan terms. Private lenders will typically work with applicants to help achieve loan terms that the lender is comfortable with, while also being favorable to the applicant, which is especially helpful. 

Relationship Building

Using the same financial institution to handle all your financial endeavors can help build a relationship. Still, the demands of the market will always be more influential than your banking relationship with large banks due to shareholder demands. For this reason, a relationship is not always enough to help you gain approval. Private lenders value their relationships with their clients and will typically include these relationships in their decision-making processes. 

If you want to get into real estate financing but have struggled with financing with the traditional route, speak with a private funding source to learn more about private real estate loan options. 

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