By providing financing and servicing their loans, private money lenders are in the business of helping those needing private money loans (financing that is secured by real estate.) Private money lenders can be direct private money investors or simply brokers. Most professionals in the industry are actually brokers. Some private money lenders actually wear two hats, being both brokers and direct lenders. In these cases, the private money professional generally funds only one or two small loans each year and works as a broker to clients for the bulk of the loans that he or she works on.

Deciding if you want to seek the services a private money broker or a private money lender is much like selecting whether to buy real estate with the aid of a broker or whether to work directly with the seller and bypass the professionals.

Working Direct With The Decision makers

The upsides of working with a direct private money investor or lender are easy to see: it will be less expensive if you go directly to the source. Brokers are compensated for the work they do by charging points on the loan transaction, often times in addition to the points the end investor charges. Therefore, as you get more brokers lined up in your transaction, the more the money is going to cost you when everything is said and done.

If you have been lucky enough to be working with a end of the line, direct investor who is a good match for your project, will be talking with and presenting your project directly to the investor, and will be able to get all of your inforamtion straight from the horses mouth. This can be both good and bad.

By working with a direct private money investor, you can avoid any communication issues, and this may allow you to close more quickly. After all, no one knows your particular situation like you do, no one can explain any potential negatives to your transaction better than you can, and no one is as committed to your business and your private money loan as you are. The down side to this, on the other hand, is working with the private money lender directly means that your loan either funds or it doesn’t, there are no other options if the private investor declines your request, except to go back to searching for another direct lender who’s perameters your loan may fit.

Why You Should Work With a Broker

The upside of working with a broker is also easy to see: a good, honest broker who has experience and who has been in the business a while will have built relationships with the direct investors with whom your loan scenario will fit. Having a broker work with you will give you the help you need to properly package your loan, improving the chances that you are able to obtain the loan you need at the rate and term that work for you in the least amount of time without the need for you to stress and continue to look and present your deal to investors you do now know. Having a good broker will be able to help you get through the application process and send it to the right private hard money lenders for your transaction. Working with a private money broker will definately save you time and trouble in financing the transaction and be well worth the slightly higher cost.

When you get down to it, your decision to work with a seasoned broker or directly with a private hard money lender will likely depend on whether you have a relationship with a direct private investor and whether you are comfortable presenting and packaging your loan request without the assistance of a professional.