Private lenders…what is a real private lender? Well, I guess it really depends on what type of funding you are looking for. In real estate investing there are private lenders called “hard money lenders”. These companies, and sometimes individuals, lend money mostly to house flippers with high interest and points (fees).
There are also some private lenders that are basically lenders that will get you (or your business) credit cards, lines of credit and other funds. The way they make their money is by getting you the highest credit limit approval and taking a percentage of that approval amount as their fee.
Nothing wrong with either of these approaches. However, when I say private lender, I am referring to friends, family, or other people you have built personal relationships with. Typically, these people are lending you money from their retirement accounts or other funds that they use to gain higher returns than those funds would earn if sitting in a savings account (who does that?).
With hard money loans or lines of credit type loans, you will be paying a monthly payment at a high interest and for a short period of time. Again, that’s fine if you are in the business of flipping or other activities that will accommodate those type of funds.
With note investing, especially non-performing note investing, there is no set time of how long it will take to exit a note and return the capital to your investor. It could take months, or it could take years depending on the state and the circumstances of the non-performing note. Performing notes are great for monthly steady cash flow into their account.
A real private investor will typically not worry so much about when the capital is returned because they are usually investing out of their retirement accounts. Based on what you and the private lender have agreed upon up front, will determine how they will be paid back over time. Of course, the even better thing about this is the lender capital is protected by having collateral to back it up in the event of any loss.
This is a great way for you to become a real private lender, earn higher than average returns and grow your retirement account!
Happy New Year! As always, please continue to stay safe out there!
For more information on notes or if you have notes to sell, reach out to Zee at Awanna Holdings, LLC (571)659-5005. ©Awanna Holdings, LLC (Jan 2021-1), zee@awannarandh.com - Email
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