Trulia, the real estate research company, just issued a report that showed that it is 44% percent cheaper to buy than it is to rent in the United States.  The report furthered that it is cheaper to buy than rent in the 100 largest American metropolitan areas.private money lending  This study, once again, demonstrates the advantages for both the borrowers and lenders of private mortgages in real estate transactions.

A private mortgage is the financing provided for a property from an individual lender or a group.  According to Jerry Cohen, President of EquityBuild, a premier private mortgage investment firm, “There are two methods for getting started in private mortgages: Mortgage Pools and Direct Lending.  Mortgage pools are like the mutual funds of private mortgages. Each investor's money is pooled with the other investors participating in the pool and the money is used for private lending.

Cohen, who was just awarded the prestigious “Moving America Forward” honor for the success of EquityBuild and EquityBuild Finance, its financial arm, furthered that, “Direct lending is typically reserved for seasoned real estate professionals due to the level of expertise that is needed to identify undervalued properties...”

Since it is so much cheaper to buy, there are many buyers now who are seeking mortgages to buy real estate.  But it has become much more difficult to get a mortgage.  Traditional lenders such as banks, credit unions, and mortgage brokers have tightened standards.  That is particularly true for vacation homes and rental properties.  In addition, many banks are cutting back on the numbers of branches they have around the country, as reported in a recent article in The Wall Street Journal.  This will leave many communities without a local lender.

These factors all contribute to the attractiveness of private mortgages for a buyer.  Unlike a loan from a bank, a private mortgage is much more flexible.  The borrower does not have to wait for the loan committee to meet that month to approve the mortgage.  The terms of the mortgage can be established to meet the needs of the borrower and the lender, whether the loan is for buying a home, vacation place, or an investment property.

For the private mortgage lender, many more will be seeking to buy.  That greatly increases the demand for a loan, from either a traditional lender or a private mortgage entity.   For the private lender, that means more will be earned from more needing loans to buy properties due to how difficult it has become to obtain financing from banks, credit unions, and mortgage brokers.  The private mortgage can also be structured so that the lender can profit from ways other than just lending the money, such as sharing in the growth of the value of the property.  All of this can be worked out in the terms of the loan between the private mortgage lender and the borrower.

Real estate has clearly rebounded from the depths of The Great Recession.  According to the Trulia report, home asking prices are up about 7% from last year.  Greater sales are being registered across the country.  For private mortgage lenders, that means more profits from more buyers seeking financing to purchase a home or investment property that cannot be obtained from banks, credit union, and brokers.