Private money investing is a type of financing in which a borrower receives funds based on the value of real estate owned by the borrower. It is reverse side of hard money lending. Private Money Investing (“PMI”) concerns the source of the funds lent to hard money borrowers, as well as other considerations made from the investor’s side of the equation. Without these private money and non institutional investors, hard money would not exist.
Private money investing is changed into a small industry centered in California. Investors are small, high specialized brokers familiar with commercial real estate lending. They invest in a project if they satisfy with the investor’s altruistic motives. Invest in if satisfy with investor’s self interest. Investors range from private individuals, trusts, and LLCs to pension funds. Individual investors generally have substantial knowledge and experience in real estate or trust deed investing. The motivation for investing includes: the simplicity of the underlying investment and a desire for:
1) An investment secured by real estate
2)Regular income derived from monthly dividend distributions;
3) Higher yields than those available from investing in money market funds or bonds;
4) An Active involvement in real estate finance.
Borrowers prefer hard money lending for completing business transactions. It is because private money may be available when other money is not. Private loans may be cheaper than other source. Private money offer flexibility. Private money requires less work than traditional bank loans. Borrower need fast loan for his business needs like construction projects, property buying and selling etc. Different private lending companies operate in California to facilitate borrowers to complete their business needs. A borrower seeking funds approaches a mortgage broker or private money lender and describes his borrowing needs. These include: 1) The amount of money sought 2) The value of the property that is being pledged as security, or collateral 3) A description of the property 4) The use of funds.
At last I would suggest it is good time for private money investing in real estate projects. For big and well established investors commercial real estate projects are beneficent. Small and new investors may invest in short term projects like small houses. It will help you to enhance experience and skills in investment business. It will give you high out return on investments. It will help you in achieving business goals and dreams.
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