Private money is how a lot of real estate investors get deals done. Compared with a bank loan, a private loan usually closes faster and leaves more room to shape the terms around the property. But private lenders are not interchangeable. Some charge more than others, some are new to the business, and some have never lent in the market you’re buying in.
Before you commit to one, check for these three things.
1. They stay involved from application to payoff
A good lender does more than wire money. They explain the terms before you sign, flag problems they see in the deal, and pick up the phone when something changes halfway through a renovation.
That matters most when a project goes sideways: a contractor falls behind, an inspection turns up a surprise, or a closing date moves. You want a lender who already knows your file and can make a decision, not one you have to chase.
The easiest way to test this is to ask around. Read reviews, talk to other investors, and ask the lender for references from past borrowers. If several people tell you the lender was hard to reach once the loan closed, believe them.
2. They know your local market
A lender who has financed deals in your area can tell you things a spreadsheet can’t. They know which neighborhoods are moving, what renovated homes actually sell for, and how long permits tend to take.
That knowledge works in your favor. Say you planned to buy a rental, but tenants are hard to find on that side of town. A lender who knows the area might tell you the numbers work better as a fix and flip.
Ask for examples of recent loans they closed nearby. A lender with real local experience will have them ready. You can see where we lend on our service area page and browse recent projects in our portfolio.
3. They have the capital, and they don’t rush you
It sounds obvious that a lender should have money to lend. In practice, some lenders commit to more deals than they can fund at once. When that happens, your closing waits on someone else’s payoff, and a delay of even a week can cost you the property.
The opposite problem is a lender who pushes you to close before you’re ready. Speed is valuable when you ask for it. If the lender is the one in a hurry, it can be a sign they need your deal off their books to fund the next one.
So ask direct questions. Where does your capital come from? How many loans did you fund last year? If the lender is part of a publicly traded company, its financial statements are public and you can read them yourself.
A quick checklist before you sign
- Have you spoken with at least two past borrowers?
- Has the lender closed loans in the same town or county?
- Do you understand every fee, and when each one is due?
- Do you know who to call after closing?
Sachem was founded in Connecticut in 2010 and has been lending to real estate investors ever since. If you want to see how we work, read through our application process or get in touch with a question about your deal.
