Becoming a real estate investor takes dedication. It takes drive. It takes hustle. And it also takes funding. This is a fast-paced business, and you will rarely, if ever, have the liquidity to keep all your deals rolling. That’s normal. What’s different is the rise of private real estate investors in Chicago to offer alternative sources of funding.
There have always been private real estate investors, but it was harder for the grinders like you and me to access them. The advent of hard money lending and the influence of technology is changing that. Now, real estate investors in Chicago have more access than ever to private real estate investors.
Real estate investors in Chicago need to know a lot. Understanding the potential utility—and the risks—of private real estate investors is more crucial than ever.
Defining Private Real Estate Investors
A private real estate investor isn’t a bank. They’re a different type of real estate finance option. Working with a private real estate investor can be a way to get liquidity, but it isn’t always necessarily a loan, per se. Some private real estate investors consider themselves just that: investors in your property, with an expectation of a return.
There are many ways to work with private real estate investors. In theory, it could be as simple as asking a relative to cut a check, crowdsourcing, or possibly setting up a network of acquaintances to each buy a share of a property. Regardless of which type of private investor you use, it’s worth noting that they can add more pressure on your investment decisions.
Types of Private Real Estate Investors in Chicago
If you’re a real estate investor looking for other private real estate investors in Chicago, here are a few options:
Real Estate Networks
There are a lot of real estate investment clubs in Chicago, and they are great for a lot of reasons. You can meet peers, exchange ideas, get to hear motivational speeches, find mentors, and more. But there are more than investors like you and me there: these are a great way to meet private investors who want to invest in your business.
A place like the Chicago Real Estate Investors Association is a great place to meet a private investor. Of course, you’ll still have to create a relationship and stand out from literally everyone else in the room.
There are a lot of crowdsourcing platforms that focus on Chicago. Patch of Land, PeerRealty, and AHP are among the most prominent. With these, regular people can invest in a property—one purchased, repaired, and sold by you.
In theory, this is really no different than any other loan. You are getting money on very specific terms that you likely have to pay back. You still need to stay within budget, value the house properly, and make sure that you turn enough of a profit that even after paying back your investors, you still have money.
The differences come from the platforms: they are geared toward the investor experience, and many of them demand a lot more updates and check-ins. Investors want to feel ownership, which is understandable.
Hard Money Lenders
Hard money lenders are private institutions that are dedicated to providing real estate financing for investors. They are different than banks which are institutionally opposed to the volatility and risks of the quick-turnaround real estate investing industry. But hard money lenders work fast and work for real estate specifically.
In Chicago, there are a number of hard money lenders that offer different rates and value investors with different criteria. There are some that are perfect for experienced hands, and ones geared more toward newbies.
Having a track record of success can get you better rates. But if you are new to the game, a hard money lender is your best bet to actually get the cash you need to close a new deal. Some of the best hard money lenders in Chicago include:
- Chicago Rehab Loans: They have a deep knowledge of the local market.
- Chicago Hard Money: You’re likely to get fast approval.
- I Fund Cities: They’re comprised of real estate experts.
- Avatar: They often provide high-money loans.
- Residential Capital: They offer fixed-rate lending.
When it comes to finding private real estate investors in Chicago, there are a lot of options. That can be good, but it also can be overwhelming. So, how do you make the right choice?
How to Choose the Right Private Real Estate Investor in Chicago
The right private real estate investor will be the one that gives you the most favorable rates and terms. It will be the one that lets you just do your work, your way. Freedom is one of the main reasons I invested in an independently owned and operated HomeVestors® franchise. I get access to the best funding sources without having to worry about a private investor wanting to control my business.
HomeVestors has a proprietary hard money lending portal for franchise owners. I put the details of my deal into the portal, and nearly instantly, I get rates from the top hard money lenders in Chicago. It’s like they’re competing for my business and I get to choose who I work with. That’s freedom and power. No awkward introductions, no pleading for attention, no day-trading shareholders to impress. Just the work.
To me, that’s the Chicago way. Get what you need and put your nose to the grindstone. With HomeVestors, I have the proprietary software to get private real estate investors to come to me.
If you want one of the best ways to get funding for your real estate deals, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.
HomeVestors of America® is the nation’s only real estate investing franchise, providing business opportunities to real estate and investment professionals across the nation.