Efficient and reliable access to capital is necessary for every real estate investor trying to build a successful business. The Southern California real estate market has grown significantly competitive over the last few years, making it necessary to avoid delays when attempting to purchase a lucrative investment property.

Getting a traditional loan, however, is a slow and exhausting process. At RTI Bridge Loans, our private money loans are designed for real estate investors who value speed, efficiency, and transparency.

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What is a Private Money Loan?

Private money loans are a fast and convenient solution for financing or refinancing a real estate investment, especially if you don’t qualify for conventional loans or don’t have time to go through the many hassles of securing a bank loan.

The amount you can get after applying for a private money loan is primarily based on the value of the property in question. The property may be the one the borrower is looking to purchase or the borrower already owns.

Unlike conventional lenders, private money lenders don’t have to abide by a rigorous underwriting process, which makes them an excellent alternative for people who need to access loans quickly. The terms for private money loans usually run for around 12 months, but a private money lender can extend the loan term from 2-5 years.

A Private Money Loan In Action

So, how do private money lenders calculate loan amounts? – The amount a private money lender can loan you is usually calculated based on the after-repair value (ARV) of the property in question.

For example, a lender may view a $300,000 property that needs $100,000 of improvements as worth $700,000 when renovations are complete and may lend up to 70% of the after-repair loan to value (ARLTV) against the $700,000 after the repair value. In contrast, a traditional lender would calculate the lending amount on the current property value.

How Do Private Money Loans Differ from Conventional Loans?

If you want to invest in real estate and need financing, you might have to choose between a conventional mortgage or a private money loan. Though most real estate investors understand the ins and outs of a traditional mortgage, many may wonder, “what is a private money loan?” Here are some common differences between private money loans and conventional mortgages:

1. Funding Source

Unlike conventional mortgages, which get financing from banks, credit unions, and other financial institutions, private money loans are funded chiefly by private lenders.

2. Time Frame

One of the most significant drawbacks of conventional loans is how long it takes to close. With a bank loan, it usually takes several weeks to close. You can usually close within a week or even less with private money.

Real estate investors like to use private money loans because time can be critical when you find a fantastic deal or buy from someone who wants to close quickly.

3. Interest Rates

Across the board, private money rates are higher than on conventional mortgages. This is mainly because private money lenders loan money for short periods and not for more than 20 years, where they would be collecting large amounts of small interest payments over a long period. Private money lenders also charge higher interest rates because most properties they help finance are distressed.

4. Property Types

Conventional lenders such as banks and credit institutions typically loan on rental properties and personal residencies. They place a more significant emphasis on the borrower’s creditworthiness and the condition of the underlying asset.

While private money lenders lend for residential and commercial properties, they rarely lend money for personal residences or owner-occupied properties.

5. Loan Terms

Most traditional mortgages are fully amortized and have interest rates lasting up to 30 years. On the other hand, private money loans are interest-only and typically have a term of 12 months or less.

Are you thinking about getting a private money loan? RTI Bridge Loans is here to answer your questions on private money lending. We are one of the most respected private money lenders in Southern California, and we’d love to hear from you, so contact us today!

What Are the Benefits of Borrowing from a Private Money Lender?

Are you looking for a traditional mortgage to buy a house to flip or use as a rental property? You could be out of luck if your credit score isn’t where a conventional lender would like it. In situations like these, some investors might turn to what is known as a private money loan.

Private money loans provide several benefits for borrowers. These include:

1. Private Money Loans Close Faster Than Traditional Loans

One of the biggest advantages of choosing a private money loan is the speed at which loan approval and funding take place. In most cases, the approval for the private money loan can take place in just one day, and they can be funded within 3-5 days if needed.

2. Private Lenders Have Few Requirements

Private money lenders have few requirements, especially when compared to banks. Private money lenders primarily focus on whether you have sufficient equity in the property, a reasonable exit strategy, and enough cash to pay the monthly payments.

3. Private Lender Offers Flexible Loans

Because private lenders offer private money loans, investors can have more room for negotiation regarding the loan terms

4. Speedy and Simplified Funding Process

Private money lenders can fund private money loans within a week, while traditional institutions can take up to 45 days.

5. Private Lenders can Finance a Project That You Can’t find Funding for Elsewhere

Private money lenders provide loans banks have no interest in financing, such as fix and flip loans. In most cases, fix and flip investors only need a 12-month loan. Such short terms don’t work with a bank’s business model, as banks want to lend money for the long term

6. No Credit History Check

For these reasons, a private money loan can be a compelling alternative for people unable to qualify for a traditional loan.

Who can Benefit from Getting a Private Money Loan?

Individuals who might benefit from taking a hard money loan include:

1. House Flippers

House flippers aim to purchase a distressed property to renovate the damage and improve its look before selling it for a profit. A house flipping professional might rely on private money loans for purchase and repair costs.

2. Rental Property Investors

Investors looking to invest in rental properties but don’t qualify for traditional financing might rely on private money loans to finance a deal.

3. Business Owners

If your business has a bad credit score and you need cash to purchase commercial real estate, you might take out a private money loan if you can’t qualify for traditional financing.

Our customized fix and flip loan programs at RTI Bridge Loans allow you to secure a loan that best suits your business needs.

Private Money Loans Pros and Cons

Like any loan, you must review the pros and cons of a private money loan before committing to borrowing.

» Pros of Private Money Loans

  • They close faster than traditional loans: Unlike conventional rehab loans, which may take more than a month to close, a private money loan might take you just a few days from start to finish.
  • Simple underwriting process. Private money lenders tend to focus on the value of a property used as collateral rather than a borrower’s finances.
  • Good credit is usually not needed. Private money lenders pay less attention to a borrower’s credit score since private money loans are asset-based.

» Cons of Private Money Loans

  • High-Interest Rates: Private money lenders usually charge higher interest rates because they assume more risk than traditional lenders.
  • Private money loans may require a higher down payment: Southern California private money loans may require a higher down payment than traditional lenders because of the risk that private money lenders are taking.
  • Much shorter terms than traditional loans: Private money loans often require repayment in one to three years.

What Should You Do Before Applying For A Loan?

While finding a private money lender isn’t difficult, you don’t want to borrow money from just anyone. To avoid signing a bad deal, consider factors such as the lender’s credibility, reputation, and interest rates.

Once you’ve narrowed down to an ideal private money lender, be prepared to:

  • Come up with the down payment
  • Gather the necessary paperwork
  • Hire an attorney to go over the loan terms after approval
  • Map out a concise repayment plan

Contact RTI Bridge loans today to learn how we can help you achieve your investment goals!

Is a Private Money Loan the Right Choice for You?

Deciding whether to get a private money loan or not mainly depends on your situation. In any case, consider the risks and the costs before you sign on the dotted line for a private money loan.

As with any debt, ensure that you have a solid exit strategy before borrowing a hard money loan for real estate financing. You certainly don’t want to give away the loan’s collateral because you can’t keep up with the monthly payments. In addition to losing the property you provided as collateral, defaulting on a private money loan can result in significant credit score harm.

So, when might you want to consider alternatives to a private money loan? Here are a few reasons:

  • You’re not willing to take on the risks associated with a hard money loan
  • You’re unsure whether you can manage to pay off the private money loan in a short period
  • You have a solid credit score and can qualify for a traditional loan with lower interest rates

Some alternatives to private money loans include conventional mortgages, home equity loans, and friends-and-family loans.

How is RTI Bridge Loans Unique from Other Private Money Lenders in Southern California?

RTI Bridge Loans is unlike other Southern California private money lenders. As experienced real estate investment professionals, we understand what Southern California real estate investors need: quick and easy applications, good terms, fast loan closing, and attractive rates. Once you’ve done business with RTI Bridge Loans, you won’t go anywhere else for your real estate investment hard money loans.

Choose us for our:

» Experience

With over 18 years of real estate investment experience, RTI Bridge Loans sets standards, having successfully funded hundreds of millions of dollars in loans for our clients

» Support

We strive to be more than just a source of private money for real estate investments. Our success has been built by taking the time to analyze and understand the precise needs of each borrower and then finding creative solutions that meet their unique financing requirements

» Licensed Mortgage Lender

Unlike other private money lenders in Southern California, RTI Bridge Loans is a fully licensed and insured hard money lender.

» Wide Service Area

We proudly offer private money loans throughout California, Nevada, and Colorado, including but not limited to; Bakersfield, Burbank, Denver, Glendale, Irvine, Las Vegas, Los Angeles, Long Beach, Orange County, Phoenix, San Jose, San Diego, San Francisco, San Fernando Valley, and Thousand Oaks

Ultimately, if you need fast and efficient financing solutions with competitive interest rates, RTI Bridge is the private money lender for you. It doesn’t matter whether you are a buy-and-hold investor or a house-flipping specialist. RTI Bridge Loans is a private money lender with a selection of hard money loans perfectly tailored to meet your real estate investing needs.

RTI Bridge Loans as Your Southern California Private Money Lender

If you’re looking for a private money lender in Southern California that you can trust, you’ve come to the right place. We at RTI Bridge Loans are here to get you the fast funding you need whenever you need it. Bridge loans, hard money loans, fix-and-flip loans, private money loans – we do it all!

With our extensive knowledge of the Southern California real estate market, we are sure to secure deals that align with your unique goals. When you work with RTI Bridge, you get a reliable, experienced, and professional lender ready to make your next real estate investment project a success.

For more information about our hard money loans in California, call us at (562) 857-2285, or contact us online.