Real Estate News


Top 10 Reasons to Work with a Private Lender

Sponsored Partner Content by Great Jones Capital


Should you use a bank or a private hard money lender for your real estate investment? Here are the top 10 reasons why you should use a private lender: 

  1. Speed – Private lenders can close quickly, typically within a few days of receiving all the necessary documentation. In a hot market where multiple offers are commonplace, the importance of this cannot be emphasized enough.
  2. Less paperwork – To receive a term sheet, you just need to provide a few basic documents for private lenders to review.
  3. Flexibility – Private lenders do not use a strict standardized underwriting process like traditional banks, allowing us room for flexibility to accommodate your needs.
  4. Personalized service – Private lenders are investing in your property and you. They are always available to try and meet your specific needs.
  5. No credit check – Private lenders do not care about the credit of the borrower, but his or her potential with their property.
  6. Construction financing – Private lenders will fund up to 100% of hard costs. Traditional lenders fund a smaller portion.
  7. Property type – Private lenders will consider funding for any type of property, including land.
  8. Less equity – Private lenders require less equity than a traditional lender typically does.
  9. Rapid turnaround on construction draws – Traditional lenders typically take weeks. Private lenders can turn around draws quickly and with flexibility.
  10. Creativity – Whether it is deferred interest, higher advance rate, partnership structures, raising capital, or any other unique avenue to help you, private lenders can creatively structure deals to get you across the finish line.

Great Jones Capital worked with a borrower who needed to quickly close on a property in Maryland, however, the borrower did not have the money needed to close. We provided him with a term sheet, which he signed and returned to us. Upon receiving his application fee, we then provided him with a proof of funds letter for him to secure the contract with the seller. As soon as he had the contract we ordered an appraisal. The first appraisal came back with the ARV $100,000 short of the expected value that our loan was based on. We provided documentation to support the borrower’s claim that the value should be more and sent a second appraisal. The appraisers supported the borrower’s claims and substantially raised the project’s ARV to where we only had to make minor adjustments on the loan. To help with closing costs, we connected him with a third-party that raised a business line of credit for him to cover the closing costs and interest payments on the loan. He got $85,000 in two weeks. As soon as he had the funds, we closed on the loan two days later.   

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