Using private financing can help you access equity in property that you own or help fill the gap on one you plan to purchase. Little City Investments is an experienced, direct lender. We finance investment real estate quickly and painlessly.
Private financing is a unique tool to tap equity. Even if you have the cash, private financing can help shorten the gap between your projects. In short, borrowing from a private lender can help you execute more real estate investment deals at once.
Faster Closing with Private Money
One of the primary advantages of private financing is speed. We close loans in 3-5 business days on a regular basis. Our application is extremely short and we don’t require tax returns, W2s, or most of the epic documentation that a bank would require from you to get financing.
Qualify Based on Equity
Another key feature of private financing is that qualifying is primarily based on the property and a strong equity position. Private lenders care less about your job, your income, and your assets than banks do. Many of our larger loans (especially $1MM+) will have stricter requirements, but if you have 30% or more in equity, you can probably get a loan from a private lender.
Let’s look at a few examples of how Little City Investments clients leverage our private lending programs for maximum benefit.
(1) Private financing for flip with major renovation.
$1MM ARV, $500k purchase, $200k renovation. Client uses Little City for $500k of the purchase funding. They fund the $200k of remodeling with cash. Even if the client has the $700k, borrowing $500k from Little City frees up cash for them to confidently do 2 or even 3 projects at the same time.
(2) Private financing to tap rental property equity.
$1MM value, $750k loan. Private lenders can help you tap the equity in a property you plan to keep. You might need to show liquidity to obtain a different type of loan, or to make improvements on other properties you own. Maybe another business you own requires capital.
Regardless of the reason, private financing helps you tap your equity in a rental property on a temporary basis. Just keep in mind these are typically short-term loans, 1-2 years, so you’ll need an exit plan. More on using Little City’s private loans for rental property here.
(3) Private financing to purchase & improve property, with plans to refinance.
$500k ARV, $220k purchase, $80k renovation. Private financing from Little City covers the $220k purchase and $80k renovation, 60% LTV (loan to value) and 100% LTC (loan to cost). Once their ARV appraisal comes in for $500k, a conventional lender will lend 80% of that, $400k. The investor gets to cash out almost $100k if they use private money first.
Without the private lending component, a conventional lender would only lend 80% of your $220k purchase price, $176k. You’d still have to fund the renovation as well, so your cash outlay would be $124k. Would you rather cash out $100k or contribute $124k? The private loan costs a bit more in the short term, but our loan enables the investor to borrow $224k more than they would be able to otherwise. Appraised value vs purchase price can be a big swing. Private lending can help you maximize your investments.
Little City Investments offers private financing for investment real estate in Texas. We lend on various Texas real estate investments, including land. We aim for same-day term sheets when you contact us and fill out an application. We close in less than 2 weeks in most cases. Our private lending programs provide real estate loans from $150k to $5MM.