2/26/12: Fast, Flexible Financing – The Power of Private Lending

When banks are broken, buyers (and sellers!) are frustrated.  But tight lending requirements open the door for private lenders, who can be more flexible about the people and properties they’ll lend to.

In this scintillating episode of The Real Estate Guys™ Radio Show, we visit with two real world real estate veterans who are putting private lenders together with out-of-the box borrowers in a market with the cash flows to support it.

  • Your powerful yet flexible host, Robert Helms
  • Your somewhat private co-host, Russell Gray
  • Special guests, all the way from Memphis Tennessee, Alex Craig and Jeremy Veldman

We’re always excited when we get to talk with guys (and gals) who are doing creative things in the market.  So when we met Alex Craig in his office in Memphis, we not only invited him to be a part of our market field trip, we asked him to come on the show and share some of the details about how he’s getting deals done in using private money.

What we discovered is that in markets like Memphis, where the prices are low, the rents are relatively high and the cash flows are strong, there’s a lot of interest from people all over the world in acquiring rental properties.  Makes sense to us!

What we also learned is that those very strong cash flows attract private investors who are interested in high yields with the headaches of being a landlord.

So how does THAT work?

Alex and Jeremy explain that even though interest rates are low for qualified borrowers, the key word is “qualified”.  And in today’s super tight lending environment, there are fewer and fewer borrowers who fit in the box.  The folks could be otherwise well-qualified foreigners who simply lack a credit history in the U.S., or have too many conventional loans (“Fannie / Freddie’s out”), but want to keep shopping.

Whatever the reason, there seems to be plenty of demand for unconventional loans.  And people are willing to pay a premium to get it when the cash flow is strong enough to support it  After all, some leverage is better than no leverage.

For the private lender, they get a much higher yield with a monthly payout.  And the loan is secured against an individual property with as much as 50% protective equity and strong cash flow.  Sounds like a win-win to us!

So we ask Alex and Jeremy to explain the whole process to us based on their real world experience.  We learn a lot and so will you!

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