There are a number of loans available out in the real world. Some are student loans, some are business loans, and then there are private money loans. Private money loans are also known as hard money loans and are generally used for very specific purposes. This article will look at several things you should know about private money loans.
- Private Money Loans Can Come From Multiple Sources: The first thing you should know about these private loans is that they can come from multiple sources. According to FitSmallBusiness, these loans can come from three main sources: friends and family; colleagues and professional and personal acquaintances; hard money lenders who deal specifically in these types of loans. These are all sources that can provide this kind of loan if you’re in need of one, though many prefer to go to hard money lenders in particular.
- Private Money Loans are Typically Secured for Renovating or “Flipping” a House: The second thing you need to know about private money loans is that they’re typically secured for renovating or “flipping” a house. If you’re not familiar with the term, flipping a house is when you buy a property in need of fixing up, renovate it in a short period of time, and then sell it for a profit. The idea here is that the loan will secure the financial means of buying and fixing up the property and the profits will help pay the loan back.
- Private Money Loans are Secured by a Real Estate Asset: A third thing you need to know about private money loans is that they are secured by means of a real estate asset. What this means is, the loan is secured because you’ve placed a piece of real estate up as collateral. If the loan isn’t paid back on time, the person who gave you the loan might be able to take the piece of real estate in lieu of payment. This is why these loans are also known as “hard money loans,” it’s because they’re secured with the use of “hard” assets like property.
In conclusion, there are several things you should know about private money loans. These include: private money loans can come from multiple sources, they’re typically secured for renovating or “flipping” a home, and they’re secured by a real estate asset. These are just a few of the things you need to know about private money loans.