Private Lending In Pittsburgh

Ever wondered how you can make an income with real estate without actually owning or selling properties? Well a common trend in Pittsburgh as well as most major markets in the US is private lending.

What is private lending? It is the process of financing real estate through peer to peer loans. This differs from conventional financing that would require a long underwriting process, 2 years tax returns, income reports, credit check, etc. Normal financing with a bank can be tedious and very time consuming. Of course for that, they offer the best rates. Investors aren't that concerned about rates anymore. People buying properties for cash just want speed and access to capital.

That is where this new industry of private lending originated. Investors purchasing properties and renovating homes needed more capital. So they went to friends and family members to ask them to loan them funds. This is a form of private financing. Other people realized this is a great opportunity to invest their excess capital and began starting small businesses strictly around lending on investment deals.

Private lending is a great way to reap residual income with real estate without dealing with the headaches of construction, finding the deals, sales, etc. You simply utilize a portion of your savings or excess cash and lend it to an investor for a short term. This normally is 1 year or less. The investor uses this capital to buy and renovate the property. The goal is to either sell or refinance that property in 6-12 months, and provide you with your loan paid in full. The whole time you are waiting, you receive fixed monthly payments just like a bank.

The best part is the rates are much higher since it is a riskier loan. These can range up to 15% in some cases! Private lending is a great way to get your feet wet with real estate. It also requires very little time besides analyzing the deal and the actual closing. After that you can enjoy your mail box money!