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  • Randy Rodenhouse

Private lending basics - Part 1

What is a private lending? Private lending is a type of lending where an individual or a group of individuals (i.e. private investors) lend money to another individual or business, rather than a traditional financial institution such as a bank. Private lending is typically done for higher-risk loans that traditional lenders may not approve or for borrowers who cannot meet the strict requirements of traditional lenders. Private lenders often charge higher interest rates than traditional lenders and usually require collateral to secure the loan. Private lending is a way for investors to earn higher returns on their money than they might get from more traditional investments, while also helping borrowers who may not be able to get loans through other channels.


WHAT IS A REAL ESTATE PRIVATE LOAN?

  • It is simply loan from an investor to an individual or entity which is secured on real estate.

  • The real estate is the collateral for the loan.

  • The loan is secure by a mortgage or deed of trust depending on the state the property is located in.

  • Typically the loan is used to purchase the property and/or rehab the property.

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