Real estate investors are always on the lookout for the next moneymaking deal. For every investor that successfully seals a deal within the first couple attempts, there are possibly just as many that may extend their efforts for months, evaluating countless potential transactions back to back without success.
Securing an undervalued asset is only a component of the investment process. Without readily available capital, an investor’s potential is limited. Savvy real estate investors increase their activity by bringing private money lenders into a deal so that the real estate funding is available. To obtain a better grasp of this, we’ll need to take a bit of a closer look into what a hard money lender is.
In its simplest terms, a private mortgage lender is an individual or company that doesn’t fall under the category of a bank, loaning money for the purposes of funding conventional owner occupant transactions. These transactions include virtually any type of property, including commercial properties, vacant land, and industrial. However, many hard money lenders refrain from lending on owner-occupied residential properties because of the extra red tape involved.
Real estate investors that are getting their feet wet often mistakenly spend an exorbitant amount of their time seeking and typing up deals without taking into account how they can raise equity capital from hard money lenders. Having a solid grasp of the principles of raising the money is perhaps just as vital as finding the deal. One may ask, why place so much effort in finding a deal if the earnest money or funds to seal the deal or make the purchase isn’t there?