At a time when the turbulence of the stock markets puts people off investment, private money lending is a viable option that is secure and offers decent returns as well. The former requires one to be patient and ever vigilant for even a small error in judgment can cause huge losses. This causes a lot of stress, as one has to be ever watchful. Many people are turning to private money lending in real estate as they see it as providing many opportunities to get stable returns with low level of oversight required.
Where investing in private money lending in Real Estate scores over other forms of investment is in the fact that it is supported by real property assets and carries low loan- to- value, typically of up to 70%. While one enjoys all the actual benefits of property investment, one is not saddled with the hassles of a house owner or property developer-dealing with contractors, appraisers, tenants, buyers and sellers, inspections, government, issues, et al.
Moreover with loan terms ranging from six to twelve months one’s exposure is of a short duration, and the earnings can be made in double quick time when compared to the many years required to recover a conventional loan. Then there is also the relative ease with which one can find borrowers which makes this line of business so convenient. In the current economic environment where borrowing capital is so difficult, private money lending provides a way out to so many people who would otherwise not be able to buy property. So even while one obtains a fair return on one’s investment, one has in a sense performed a good deed by helping people become property owners.
Even though the economy has made a smart recovery in the 2013 period, people are quite wary of investing in the stock market, as they don’t want to be in a situation where they over commit owing to the current market euphoria and lose everything in case of a market correction. This explains why more and more people are turning to the much safer private money lending in Real Estate option.
All major cities and the towns have quite a large number of non institutional private money lenders who will lend against residential and commercial Real Estate. In the Chicago Metro Area for example such money lenders are spread out across Edison Park, Loop, Beverly Lakeshore East, Rockwell Crossing, Roscoe Village, Lakeview Balmoral, Bridgeport, Holestien Park and so on. They usually lend toward real estate purchase, rehab or reconstruction, equity cash out, and refinance.
Thus we see private money lending in Real Estate is not only quite prevalent; it performs a vital economic function that not only allows investors to make good returns but enables a lot of people who otherwise would not obtain finance to fulfill their property dreams. It really is a win-win situation for all concerned provided one has maintained due diligence.
Summary: More and more people prefer to invest in private money lending over investing in the stock market. While the latter is fraught with uncertainty and risk the former has several distinct advantages. These include support provided by real property assets, low loan to value and short term exposure to risk. There is also less oversight required. The Chicago Metro Area is a prime example of the popularity of this form of investment.