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While bridge loans are a non-traditional investment, the advantages of being an investor with a private lender are noteworthy:

While bridge loans are a non-traditional investment, the advantages of being an investor with a private lender are noteworthy:

  • Diversification: Private real estate lending offers true diversification for the investor. The rate of return is not affected by stock market whims, global politics, or even long-term real estate trends.
  • Collateralization: Investment funds are secured against freshly appraised real estate without requiring investor to purchase or manage rental properties. Typically a maximum of about 65% is loaned on the current or improved value of the property.
  • Profitability: Investors can earn proven, predictable rates without tying up their money for years (or decades) at a time. (Investors are typically offered a set rate somewhere between mid-single digits to low double digits, annualized, with no fee, though terms vary according to lender and individual deals.)
  • Control: Bridge loans have not been sold, re-sold, converted into stocks other investment instruments, and then packaged in bulk to hide deficiencies. These are simple, direct, secured loans that have been individually evaluated to protect both the investor and the company structuring the loan. Bridge loans have not been sold, re-sold, converted into stocks other investment instruments, and then packaged in bulk to hide deficiencies, as were the financial instruments that caused the subprime meltdown. Private lending borrowers are individually assessed and qualified, and investors are essential business partners that the private lender wishes to keep satisfied.