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Private Money Financing Explained

 

Wise investors look at the big picture when analyzing the feasibility of a real estate investment opportunity and consider private money financing as one tool in accomplishing their goal.

Private money works best for the short term, bridge financing opportunities where value is created in an asset or where timing is critical to creating value.

Private money is not the optimal source of financing for many investment situations. However, if private money will allow you to pursue an excellent investment opportunity where otherwise you would not be able to, private money should be considered.

Most often, private money will be less expensive and less burdensome than obtaining a partner.

Fidelis had a client that was looking to purchase an office building at an extremely attractive price.  The buyer had never used private money and believed it was too expensive and ultimately passed on the investment opportunity.

 The private money would have been used as a bridge loan to acquire and stabilize the property, which would have created substantial value, far in away compensating for the cost of using private money because it would only be for a short period of time until other conventional financing could be obtained.

 The buyer was caught analyzing the short term cost, and not looking at the big picture, the value created in the long term; thereby, he walked away from a great investment opportunity.

Don’t eliminate a great investment or refinance opportunity just because the financing costs may be higher than you are used to paying.

Yes, private money is more expensive than conventional financing and is not a fit for all deals. But for short term loans where there is value created either through timing or added property value, the opportunity cost of not doing the transaction is often more than the private money cost.

Fidelis Private Fund is a competitively priced direct, private money lender and provides extraordinary customer service.

Let us see how we can help you accomplish your goal. If private money is not the best option, we will help find the best financing solution for you.

Where has using private money helped you in accomplishing your financial goals?

 

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