✅ Why People Use Private Money
Private loans solve problems that traditional lenders avoid. Common reasons:
- Speed — funding in days, not weeks
- Flexible underwriting — credit/income not the main factor
- Property condition doesn’t matter — great for flips
- Short-term bridge until permanent financing is ready
- Creative deal structures (cross-collateralization, high LTARV, etc.)
✅ What the Loans Typically Look Like
Though terms vary, common features include:
- Interest rate: 8%–14%
- Points/fees: 1–5 points
- Loan-to-value (LTV): 60%–75%
- Loan-to-ARV (fix-and-flip): 65%–80%
- Term: 6–24 months
- Collateral: real property, often investment property
- Repayment: interest-only monthly payments, balloon at term end
✅ Types of Private Money Loans
1. Fix-and-Flip Loans
For buying distressed properties, including renovation funding.
2. Bridge Loans
Short-term loans until permanent financing becomes available.
3. Rental Loans (DSCR)
Some private lenders offer longer-term private DSCR loans for investors.
4. Construction Loans
For ground-up builds or major renovations.
5. Land/Development Loans
For raw land, entitlement, or early-stage development.
