Are you looking for private money to fund your next business idea in Los Angeles? Delancey Street can help with that. We have a pool of private money, ready for lending. Our conglomerate pool of investors has decades of experience doing Los Angeles private money lending. Our Los Angeles private money lenders can not only fund your new venture – but can you give years of experience and assistance. If you are unsure if private money lending is right for you, or not sure what the difference is between private money lending – then this article will be useful.
What’s a Los Angeles private money loan
Private money lending implies borrowing from an individual investor. Real estate investors often use private lenders to finance deals which wouldn’t qualify for a traditional loan. In some cases, investors simply can’t wait the usual 30-60 day timeline for a conventional loan.
Private money lending differs from normal lending in some ways. Private money lending involves borrowing from people with the financial means to invest capital into your venture (there’s no financial institution backing the investor). An example is your friend, or family member – any individual investor whose intrigued by your idea and wants to be a part of your venture.
Private money lending is something that’s a half way point between private money lending and conventional lending. Private money lending doesn’t have the usual challenges that conventional lending does, but typically there are still some criteria. Both types of lending are different tools.
Advantages of Los Angeles Private Money Lenders
Private loans are ideal for investors who want to buy a property which needs lots of repairs. Conventional lenders often refuse to give mortgages for properties that are seriously damaged, or vandalized. Private investors see the potential in a property which can be purchased cheaply – and then fixed and resold. Los Angeles private money lenders have fewer requirement than other lenders. Private lenders in Los Angeles like Delancey Street, focus on the profitability of the purchase, rather than the borrower’s credit score or financial history. In addition, private loans can be given fast. Loans from a conventional lender can take 60-90 days to get approved.
Disadvantages of Private Money Lending
There are a few disadvantages to obtaining private money loans. First, a Los Angeles private money lender will charge a higher interest rate than the average bank. Standard interest rate for private loans is anywhere from 10-12%. Depending on how risky your venture is, the interest rate could be higher. If the property is risky, then interest goes up proportionally. Lenders also add points to the loan, creating an additional expense.
Another disadvantage is that unlike with banks, you can’t pay off a private money loan over a 30 year period. You are expected to pay the loan back within 6-12 months. Some more lenient lenders might give you additional time, but this is a case by case basis. One more thing to keep in mind is that you have to use property as collateral for the money you get. This means making sure the terms and conditions of the private money loan suit you. Assuming you do your research before you pitch an investment deal, a private money loan can work.
What are the requirements for securing a private money loan
Private lenders come in all shapes and sizes. There are no government regulations covering private money lending in Los Angeles. The terms and conditions from one loan to the next can vary greatly. Typical private money lenders will want proof of identity, a note, deed of trust, and a plan outlining how the money will be spent, and the profit you expect.