How Private Lending Works

Short Term Loans with Great Returns

Private lenders are often referred to as hard money lenders, and private money loans are used to finance the purchase and renovation of an investment property.

Often, our investors use their Home Equity Lines of Credit where they are paying 4 to 5 % and invest with us to earn 8 to 10 %.   They see it as a way to use “The Bank’s Money” to make more money.

Property Sense makes use of private money loans for:

• Short-Term Fix-and-Flip where we purchase, renovate, and sell a property within 1 year.
• Buy-and-Hold properties, where we purchase and renovate a rental property before refinancing with a conventional mortgage.

Private lenders will most typically lend an amount equal to a percentage of a property’s loan-to-value (LTV) ratio or its after-rehab-value (ARV).

For example, we typically look for private money loans up to:

• 90% of a property’s loan to value (LTV)
• 80% of a property’s after repair value (ARV)

As a Private Lender, you receive:

• Higher than conventional interest rates – ( 8% to 10% – depending on the property and purpose ).
• Money paid to you up front as a percentage of the loan ( called Points ) – between 1% and 2%. For example for a loan of $100,000 with 1% Point, the loan would be for $100,000 but we would only receive $99,000, so you are essentially getting 1% up front.

We cover all your external costs (legal, appraisal, etc).

Loans are generally short term, between 6 months and a year.

If you are interested in talking to us about private lending please reach out – we’d be happy to talk to you.