When it comes to private investor home loans, it’s obvious the person investing the money benefits from having their money work for them by collecting interest during the period of the loan. Even when the person who borrowed the money defaults on the loan, the investor gets the property that was used as collateral to secure the loan. In many cases, the property is worth much more than the face value of the money borrowed, which is precisely why the loan is so valuable to the real estate speculator who bought the property. If appropriately managed, private investor home loans can be profitable for both parties.
Using Private Investor Home Loans to Generate Income
The side of private investor home loans most people do not see is the individual who puts up the money. The investor hopes to realize a return on the investment, in the form of interest accrued over a specified period, usually short-term. These non-banking-institution lenders sometimes charge additional flat-rate terms, fees, and costs for borrowing the money.
Also, these private investors could make several long-term loans to mortgage speculators who are betting the value of the property will go up or the value of the mortgage will go up when interest rates rise. There is very little risk involved as property nearly always rises in value.
Using Private Investor Home Loans to Renovate Property
Even though a home may have been built 30 or 40 years ago and maybe outdated, it still has value, even when the current owners don’t see it or are not interested, because they have moved on to a new place. Private investor home loans are often used to renovate and update depressed properties and bring their value back to the market. Quite often, spending $20,000 or $30,000 to upgrade a home can double its current value, and that can be a boon for the real estate speculator that discovered it and made the update.
You see these success stories all the time on HGTV shows, like Fixer Upper, Bang for Your Buck, Flip or Flop and many more. There are literally hundreds of these shows that highlight an industry where investors take an older home, put in some work to modernize it, add new appliances and plumbing and resell it for a profit. Sure, you must be careful to get a depressing home in a good neighborhood and have the patience and foresight to design the renovations and see them through to completion. It helps to have a buyer for the home before you do the restoration, but that’s not always possible.
Private investor home loans are nearly perfect for fix and flippers; they can get the money they need to renovate a home without having ideal credit or a substantial down payment to secure a property. They can buy the materials to make the repairs and have the hard money they need to pay worker salaries for the project.
Why Red Door Funding?
Red Door Funding, at (832) 539-1099, can get you the money you need to make the renovations on a property you want to buy, fix, and flip or put your money to work while you tend to more important things.
Red Door Funding arranges loans for “fix and flip” projects by bringing the investor and the lender together in a way that is beneficial for both parties. When you need hard money to buy and renovate a property, or you have money to invest, the professional lenders in the Houston area are at Red Door Funding. Just complete the credit application here. Send an email with your questions to dwilliams@reddoorfunding.com.