Private Lending: A Safe Real Estate Based Business Option

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by: alycemcghee2749
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Word Count: 577
Date: Sun, 6 Mar 2011 Time: 10:48 PM
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Some things are basic when investing, like buy low and sell high. This assertion is true if you plan to invest in stocks, real estate, or any type of asset and make a profit. Many people choose to invest in stocks because it is considered passive revenue, you didn't do any physical labor but you receive earnings. Most don't realize it, but real estate investing can also offer passive proceeds.

In today's economic environment many pension plans have taken a whipping. Wall Street's knee jerk reaction to the daily news can be very frustrating when you look at your monthly statement. On the other hand, a real estate backed investment can offer a consistent, predictable profit. Making double and triple digit returns in real estate can be the norm instead of the exception. And, these types of returns can be had by both active and passive investors.

Like every other industry, you could choose a real estate activity that fits your way of acting. The amount of work you are willing to do will affect your plan of action of profit. Active real estate investor's activities may include finding and purchasing, rehabbing, wholesaling to other investors, renting, leasing, property management, or selling the property. On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a good funding decision. They are looking for excellent business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.

Passive private lenders simply accumulate money, from work done by others. They lend funds to a real estate investor who is actually a project manager. The real estate investor selects, analyzes, and develops exit strategies for the property. They may work with a real estate agent, inspectors, contractors, appraisers and closing agents in the analysis and closing process. Then, they can work with wholesalers, tenants, leasees or potential homeowners to oversee the property during the holding period.

You can become a passive real estate investor. How? You could use cash, your IRA, 401K or other pension plans to make private real estate loans to investors. You can be the bank! Banks make money on real estate deals and you could too. They lend money to investors and compile interest on their money. They have none of the hassles related to managing the project. They just collect the profit.

It's not enough to just be a private lender. It would not be wise to pass out money and hope you get a sound return. You have to work with a real estate investor that makes wise decisions when it comes to procuring properties. Some of those decisions include working with an experienced team that knows how to analyze deals, offer lower loan-to-value (LTV) on loans, and have beneficial exit strategies. A really sound real estate backed investment can earn better, consistent and foreseeable returns.

Stop the Bleeding! Check out our educational private lender website, and learn how you can become a Private Lender. While your there download the Free Private Lending Report and find our how you could safely earn passive income by making real estate backed investments. Sign up for a webinar and get information on using the funds currently in you 401k, IRA or other pension plan.

About the Author

Get details on how you can become a private lender. Download our free report, "Private Lending in These Economic Times." Find out the "Top 10 Questions Every Private Lender Must Ask Before Lending A Dime."