Private money lending is a different kind of real estate investment with plenty of attractive benefits. If you’re seeking to diversify your investment portfolio with real estate but you aren’t necessarily interested in actually owning property, private money lending investing might be just the opportunity you’re looking for.
What is Private Money Lending?
Private money lending is a form of funding that supports the financial needs of real estate investors. These investors find commercial, residential and/or land properties with the potential for profit. The project may include rehab, construction or large development. That investor, which might be acting as an individual or a company, then seeks funding to complete the project through private money investors. These private money investors realize monthly gains on their equity investment until such time as the property is sold or the original borrower buys out the investors. Essentially, as a private money lender, you act as the bank, lending money to real estate investors.
Of course, there are many nuances involved in private money lending. If you are interested in this unique form of real estate investing, you should contact American Real Estate Investments for more information about specific opportunities. But to learn more right now, here are the four benefits of private money lending that make it one of the most popular forms of investment.
4 Benefits of Private Money Lending
- It’s the Most Passive Form of Real Estate Investment Available
Real estate investment with private money lending represents the most passive real estate investment available. There’s literally no easier way to become a real estate investor. You don’t have to find property, you don’t have to do any labor on the property, look for tenants, collect rent, perform maintenance, pull permits or put it up for sale. After you’ve completed your due diligence and quoted your loan terms, all you do is supply all or part of the funding and collect your monthly payouts.
- Private Money Lending Provides One of the Highest Cash Flows
Compared to most other real estate investments, if not all, private money lending provides one of the highest cash flow figures. Based on one of our past projects at American Real Estate Investments, your private money lending investment could earn upwards of 10.5% annually. At AREI, you receive monthly interest payouts on that equity, typically over a 24-month period. That’s far more than other returns on safe investments. Pay outs begin as soon as the project is funded.
And, at AREI, you don’t have to wait until the end of the project to get back your initial investment. Your initial investment is paid out at different phases of the 24-month project. You have the option at the end of Phase 1 (about 4 to 6 months in) to get back a percentage of your investment. You would then be earning interest on the remaining amount. For example, if you took back $20,000 at the end of Phase 1, you’d be earning interest on $80,000 until the end of the next phase.
If that isn’t enough to pique your interest, consider this. You also have the option to roll your pay downs into other projects with similar interest rates. In our experience, 99% of the time, investors roll pay downs into another project once they see how much money they can earn with this completely passive investment vehicle.
- Safest Way to Invest
As a private money lender, you’re in the safest seat at the table. You’re the bank. As the bank, you have the lowest risk of anyone. Your investment goes directly into an equity account until the project is fully funded, which is typically 60 days. At that stage, you begin earning monthly pay outs at a pre-determined interest rate. You don’t have sit and worry if the stock market is going to fall You’ll know precisely, almost to the penny, how much you’re getting each month. After the project sells, you receive the balance of your initial investment.
- Real Estate Private Money Lending is Secured With Real Property
When you opt to invest in private money lending for real estate, you have the peace of mind of knowing that your investment is secured with real property. There’s an actual asset that backs up your money. As such, there’s very little chance that a real estate investor would ever renege on your loan terms. If that happened for any reason, you could begin foreclosure proceedings to seize the property. That makes your investment very secure, with extremely low-risk.
There are substantial gains to be made by being a private money lender for real estate investments, and we’d love to talk with you about the possibilities. With just a minimum $50,000 investment, you could be looking at an annual interest return of 10.5% over a 24-month period, with up to 21% IRR. It’s 100% passive income, with one of the highest cash flows, extremely safe, and backed by real property. What could be better than that? Let’s work together.