In this sad story, that is so very
common in real estate investing, a private
money loan from a non-bank lender could have been a solid back-up plan. But
too many times, solid borrowers depend on their banks to follow through when a
lot is on the line. In this case, $50,000 in earnest money, and of course, all
non-refundable. And then the bank says, â€œIâ€™m
sorry Mrs. Peterson but we are unable to approve the loan.â€
Â Â Â Â Â Â Â Â Â Â Â Mrs.
Peterson is a first time real estate investor in Park City, Utah. She had been
watching a foreclosure down the street from where she lived for almost 2 years.
This is a highly coveted neighborhood in Park City, Utah, the site of three ski
resorts, where homes start at $1,000,000. With strong income and credit, Mrs.
Peterson has always had a good relationship with her local bank down the street
in Park City. She began talking with her banker about purchasing this
foreclosure down the street from where she lived. She thought she could
purchase the property and could spend another $150,000 on cleanup, renovations,
and updates to the property. In six months, she could sell it for quite a bit
more than she paid for it.
Â Â Â Â Â Â Â Â Â Â Â Well,
I think you know what happens to Mrs. Petersonâ€™s great plan of being a real
estate investor. You see, because Mrs. Peterson was a first timer in real
estate investing, she was unaware of other real estate lenders who offer
private money loans. There was no doubt in her mind that she would obtain a
loan from her bank to buy that foreclosure. With $50,000 in earnest money gone,
Mrs. Peterson could have done it in a matter of days using a private money
Â Â Â Â Â Â Â Â Â Â Â Are
you new to the subject of private money loans for real estate investing? For
just about any kind of credit, from home loans to development and construction
loans, private money lenders are the
second choice to bank loans. Particularly for real estate investors who are
just getting their feet wet, private money loans are an essential back-up plan
for real estate loans. Just ask Mrs. Peterson who will probably never try
another real estate deal in her life because of this mistake. Too bad, as this
could have been a good first deal for Mrs. Peterson if only she would have had
a back-up plan to bank financing.