Private money lending is a financing option where a private individual or business lends an investor or corporate entity their personal capital to utilize for commercial investment purposes. In the real estate market, it is an option for funding an acquisition property other than a conventional bank or commercial lending institution. Private money lending has exploded in popularity since the global credit crunch and the Internet has made it possible to obtain a loan to invest in properties all over the world from the comfort of your own home.
Real estate is one of the few sectors of the economy that has not only survived the credit crunch, but thrived during it. However, in the past investors were hesitant to lend money to real estate developers, builders, and lenders due to their lack of collateral and poor credit history. As the industry has improved and there have been a number of reforms to the underwriting process banks are now more willing to provide loans for these specific types of borrowers. There are also many private money lending institutions that specifically deal with residential, commercial, and industrial properties. Many times private lenders will use a much stricter underwriting guidelines than traditional banks.
A prime example of a private lender is Queens Bank, which has taken on a more aggressive stance in underwriting commercial real estate loans. Queens Bank has taken on the role of being a primary financial agent for developers looking to raise funds for projects. The bank not only requires a higher credit score from potential borrowers, but also requires a level of experience as well as a proven track record of managing commercial loans and making sure the borrower receives all of the funding they are owed. If you are interested in exploring this type of loan to finance a property, we recommend talking with your local Queens bank about your options.