The article tells the difference among a disguising private money lender who actually is just a broker and an actual direct private money lender. Also the content of this article will provide you the information about the dire disadvantages of dealing with disguising private money lenders.
This is quite significant for a real estate investor to figure out the difference among private money lenders and direct money lenders. Let’s evaluate first the definition of a Direct Private Money Lenders?
Private money lender is pretty obvious, some body that is actually going to lend money to a real estate investor and direct means that you, as a real estate investor, are going to a private money lender instead of working with a broker. In numerous cases, brokers will gather your information and try to find a home for your loan or find a place for your loan. Dealing with a direct private money lender means that you are going to actually contact the individual or the company where you are providing your information to the person(s) who are actually going to do the funding for you. So direct private money lenders are lenders that actually have the capital, they are not going to outsource your loan or package or broke for your loan to a secondary source which will later on provide you the funds.
Now, the real estate investor must come up with the next query of how one can differentiate among a broker disguising himself as a money lender and a direct private money lender? Now days there are several brokers who have disguised themselves as direct private money lenders. They have their websites where people advertise and really what they are doing is they are just grabbing potential real estate investors’ data while further trying to find someone that will actually do the loan for you. Lots of times those people will quote terms or rates based upon their personal assumptions that may not actually be the case. But if you actually go to a direct private money lender you are actually going to the source. How can you know if you are hitting the right direct private money lender? It is really simple; you just have to ask the individual are you a broker and going to submit my information to someone else? You can ask such questions assertively because you technically have all the rights to give the authorization for your information as per your own choice.
What if you are dealing with a broker disguising himself as a money lender and not actually having funds for Private Money Loans? It is important to know that if you are working with such type of broker, he is actually not saying I am going to find the best home for your loan and try to give you the best rate and everything else. When it comes to hard money, it is typically the hardest thing for such type of brokers to find someone who will actually fund the loan. So be careful with such type of money lenders. When talking about a broker who actually calls himself a broker, it is fine if he will find a property for which you can lend from some direct money lender and in some instances it actually is wonderful to work with brokers in order to find a perfect property as per your needs.
So when it comes to deal with a direct private money lender, you know you are going to a source that actually has the capital and willing to give you the loan. So the advantage of working with a direct money lender is you know when they give you the approval for loan. It is not conditioned upon something else. I can tell you from experience one of the most frustrating situations is when you are sitting at a title company and there is a broker that is not a direct money lender telling you some thing is going to be happening and the wire does not come or the broker saying we are only a few thousand dollar short for making this deal work. You are going to have to find a few thousand dollars; this deal just isn’t going to work because they don’t have any control over the situation whatsoever.