When you think of getting a loan, you picture going to the bank, right?
But like many other industries, the mortgage industry is constantly evolving.
Loans no longer have to come from financial institutions, but can now be provided by private individuals and funding groups.
Private lenders have become commonplace in the mortgage space, which is a long way from when many people assumed private money loans were scams or unattainable. Though private lender data remains, well, private, reports estimate that the industry generates about $65 billion in mortgages per year.
Learn about the new ways that private lenders are taking over the mortgage space and how qualified investors can be a part of it.
What are private lenders?
Private lending is exactly what it sounds like — loans that are lent from a private citizen or organization.
Banks and credit unions are financial institutions that adhere to specific guidelines set by banking regulatory authorities.
Since private lenders are not bound to the same regulatory agencies that banks are, loan terms are set between the lender and the borrower themselves.
Private lenders do register as such in their state. The purpose is to ensure that borrowers and investors of the private lenders aren’t being misled or deceived.
This flexibility is what makes the private lender popular for mortgage lending.
Those who don’t qualify for a conventional bank loan because they have unique circumstances, can’t prove traditional income, or have problems with their credit score, often flock to private lenders.
Private money lenders often rely on word-of-mouth referrals to find their clients. They want to create good working relationships with their clients so they can secure those referrals, and repeat clients.
How private mortgage lenders differ from banks
Other than their differences in regulations, there are other ways that private lenders differ from traditional lenders.
The perk of borrowing from a private mortgage lender is their lenient credit qualifications. They want to know that you can repay the loan but aren’t as concerned as a bank would be with standard credit scores and other requirements. This results in a much quicker turnaround time for loan approval and the home purchasing process.
Private loan terms can usually be determined between the lender and clients. But the loan will likely come with a higher interest rate than traditional loans.
Borrowers securing the loan for a mortgage often use the private loan to purchase the property and then refinance elsewhere for a lower rate.
Why it’s time to invest in private lending
Investing in the private mortgage sector is lucrative since it offers a chance at passive income and yields a high return. Marquee Funding Group, for example, yields 8-9% interest for their investors annually.
Savvy real estate investors are often familiar with using private money lenders. House flippers often use them to purchase properties quickly in order to complete more deals.
But for investors who aren’t willing to get hands-on in their investment properties, private funds offer profitable opportunities without the responsibilities of fixing the property or being a landlord.
Real estate properties are also a great way for investors to diversify their portfolios and protect their assets. This type of investing isn’t correlated to the stock market, so investors won’t need to panic when the market goes into a frenzy.
Despite market and economic conditions, such as inflation, real estate tends to stay profitable. Especially if the funding group or individual is established and has the experience needed to protect their investors, it’s generally a safe bet.
Investing with Marquee Funding Group
Marquee Funding Group is a pioneer in the private lending space and has over a decade of experience. Our team has and will continue to deliver excellent returns with great security.
Marquee Capital Fund 1 provides qualified investors the opportunity to participate in a mortgage fund comprised of quality real estate secured loans.
Our fund allows investors to passively invest in high-yielding secured notes via an array of well-underwritten mortgage products, which are handled in-house.
Investing in our private fund is an attractive alternative to traditional fixed-income investments, providing high-yielding fixed income while protecting investor capital.
Accredited investors will have any of the following:
- Your annual income is greater than $200,000 (for the past two years)
- Your joint household income is greater than $300,000 (for the past two years)
- Your net worth is greater than $1 million (excluding your primary residence)
If you’re accredited and looking for a new opportunity to diversify your portfolio, look no further than the Marquee Capital Fund 1. Reach out to our team to start participating today.