Introduction to Private Lending

Why Use a Private Lender?

Private lending is a great option when looking for real estate funding. At Crowdcopia, we understand that real estate investment deals often require a quick close. A benefit to utilizing our services as a private lender is our ability to finance quickly with minimal underwriting. This allows our clients to get straightforward funding for their real estate projects.

There are many benefits to private lending, and we are happy to answer any questions you have as you continue to learn more about real estate investment!

What Is Private Lending?

Private lending describes businesses like Crowdcopia that lend their own capital to other investors or developers with the loan secured by real property. Private lending is oftentimes referred to as “Hard Money Lending” given loans are secured by “Hard” assets, like real estate.

Unlike private lending, most traditional public lending institutions are slow and impersonal with lengthy applications and strict underwriting requirements. These frustrating hurdles make it difficult for developers to get fast funding for their real estate deals through traditional public lenders or banks.

 What makes Crowdcopia different from Other Private Lenders?

Crowdcopia makes lending easy – for both the beginner and experienced borrower!

Our hands-on approach provides new borrowers with our knowledgeable staff to help teach and guide them through the process. For our experienced borrowers, we provide support where needed while empowering them to continue to rapidly grow their own business.

And we’re much more than a lender! We provide concierge-level service where needed, including:

  1. Reviewing your Construction Budget & Scope of Work
  2. One-on-one application support
  3. Help finding well-priced property insurance

What are the Advantages of Private Lending?

There are pros and cons of private lending and borrowers should weigh each as it relates to their project and finances. We at Crowdcopia believe the many advantages explained below far outweigh questions related to lending rates on traditional banks. We strive to make the application, funding and construction draw payments as simple and speedy as possible.

Below are some of the reasons why private lending could work well for you and your growing business:

1.Fast Funding

We’re fast! Timing is often of the essence to make the best deals, especially in real estate. Private lenders like Crowdcopia can typically underwrite and fund a deal much faster than traditional lenders.  Given many real estate deals depend on a fast turnaround, this is frequently the biggest advantage to using a private lender. Speaking of fast: at Crowdcopia, we can do a start-to-finish close in under a week with our fastest deal closing just 2 days!

2.Creative Lending Solutions & Terms

We’re here to help you succeed! Crowdcopia can customize a solution to best suit each client and project. Unlike more traditional lenders that have set criteria and predetermined restrictions, private lenders like Crowdcopia are able to work with each project and borrower individually to come up with financing solutions that make sense for that particular deal.

3.Asset Backed as opposed to Personal Underwriting

Being “asset backed” means that your loan is secured with the property being financed as collateral, whereas personal underwriting is when the individual’s underwriting solely determines eligibility.  While both the property and the borrower are underwritten, the strength of the actual real estate project is typically given much greater weight than things like credit reports.

4.Lend on Non-Stabilized Assets

We love Most traditional lenders require for an asset to be “stabilized” before they can provide funding. At Crowdcopia, we’ll work with many types of real estate projects – even ones more traditional lenders avoid due to the extensive renovations required. Most private lenders are not “afraid” of the actual  and are able to determine a valuation and lend on even the most complex deals or dilapidated properties where more traditional lenders would not. At Crowdcopia, we have the real estate and construction expertise to help our borrowers beyond just a money loan.

What are Some Misconceptions of Private Lending and How Can Crowcopia Help?

I’m better off just using my own money

While this is sometimes true, it will not allow you to grow as quickly as you may want. By borrowing money from Crowdcopia, you should be able to take on at least twice as many projects than if you were using your own cash.

Lenders have no idea what goes into building a house

This may be true in many cases, but not with Crowdcopia. The founders and staff have extensive experience in every part of the real estate investment field. Our team has knowledge from finding, gutting, building a home to renting, selling and managing properties. Construction advice is a strength for Crowdcopia – we use this knowledge and background to help all of our customers!

Once I get a loan, the lender only cares about getting their interest payments and collecting fees

This may be true with other lenders, but not with Crowdcopia. We want to see you succeed. That’s the main reason we do all of our draw inspections in-house and free of charge. This way we can help keep the project moving along and on the right track!

The lender just wants to get your house

No, the truth is, we don’t want your house. We want to help you successfully complete your project so that you profit and continue to build a partnership with Crowdcopia for your future real estate development. Our business does better when you and your loan succeed.

What Are Different Types of Private Lending?

Individuals have a few different options when choosing a private lender. Below are a few common types of private lending:

1) Private individuals, such as friends and family

2) Finance company that specializes in hard money lending, such as Crowdcopia

3) Crowd-source funding options (raising small amounts of capital from a large number of individuals usually through the internet)

4) Private equity or hedge funds

How can we help you?

Contact us today with your real estate investment questions!

Dan B.