Do you think you have just invented the next big thing? Do you own a property that’s been sitting for years, waiting to be developed, yet you do not have the means to do so? Has your first business been so successful that you have decided to expand and yet the bank won’t give you assistance? Whatever the reason is, if the bank refuses to loan you money, you can always opt for a private money loan to provide you the funds you need. Here’s a good read about Hard money loans, check it out!
It has been said that there is a far greater chance of getting better returns with private loans than that of normal investment vehicles. There are some that can yield a good four to six percent rate of interest for a period of six months to a year, but for that same amount of time and money, a private loan can get a rate of return up to ten to fifteen percent. To gather more awesome ideas on private money loans FAQ, click here to get started.
Because the expected return in this investment is greater compared to the rest, the risks involved tend to be extreme too. Start-up business ventures are always a risk to take and only those in private money loans would gamble so much money on such a thing.
For example,an independent contractor wants to buy a house, renovate it, and sell it for more profit, but he does not have the funds to put his plan into action so he then attracts a private investor to give him funding for such plans. There is no standard for such business because the amount of interest received by the lender will depend on so many factors such as the size of the property purchased. The borrower promises financial returns to the lender and at the same time, he hands over the first mortgage or a promissory note regarding the funds. When there is trust between two parties, the relationship will work better and this is why the borrower will give the lender a guarantee that he or she will still have something to reap and sell in the event the business venture fails, regardless if it amounts to the value of the capital or not.
One interesting fact is that a large number of private money loan deals are done with businesses within a fifty mile radius. This cannot really be explained further, but there is another study that proves the lack of communication or closeness between the lender and the borrower is one thing that contributes to the failure of the business venture.
These research studies does not necessarily mean that you can only opt for private money loans within your local area because the internet is there and it is a great way for you to seek out a wide variety of investors just waiting to fund the right business venture. Kindly visit this website http://www.ehow.com/how_2082473_get-private-money-loan.html for more useful reference.
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