A front page article in the business section of the Florida Times-Union, the newspaper for the Jacksonville area, recently detailed how more and more investors are buying apartment buildings in the north Florida area, driving up the prices.Real Estate Investing, Small apartment building investments 

For this type of investing in real estate, a private mortgage offers many advantages as the means of financing.

Due to the abuses in the mortgage market that brought on The Great Recession, traditional lenders have made their products much less attractive.  For investors, the interest rate is much higher, and a much larger deposit is required.  There is also a cap on the number of mortgages that many lenders will allow for an investor to be carrying, no matter what the payment history is for the borrower.

A private mortgage, one from an individual or group of investors, is ideal for the equity lending needed for an apartment building for many different factors.  The most important is that a private mortgage lender is far more flexible.  If a borrower has a great payment history and stellar track record as an investor in real estate, the private mortgage lender could reward this with a better loan or more favorable terms.  For a traditional lender like a bank or credit union, there could be a hard cap on the number of properties that will be financed.

The terms could also be much better.  A private mortgage provider is looking to profit from as much business as possible in equity lending for investment real estate and other properties.  There is a desire to make the loan, not reject the applicant as seems to be the case now with so many banks, mortgage brokers, and credit unions.   Private mortgages are offered as the lender wants to be in this sector of banking and finance, not do it as a sideshow to credit card or student loan operations.

Real Estate InvestingThis desire to lend results in the private mortgage individual or group being ideal for follow-up borrowing where a bank, credit union, or broker could fall short.  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...”

If an addition or major repair is needed, the private mortgage pool or direct lender can move much quicker than a bank or credit union.  They do not have to wait for the loan approval committee to meet next month.  The addition or repair can be made in an expeditious manner, to the benefit of all parties involved.

Apartment buildings can be great investments.  With rents increasing and the value rising, there should be a place in every investment portfolio for apartment buildings.  A private mortgage from a mortgage pool or direct lender could be the needed financing for the acquisition of these investment properties in a much more profitable and efficient manner than a bank, credit union, or mortgage broker.

by, Jonathan Yates: EquityBuild News Contributor