Owning real estate can be a rewarding and high return alternative investment. However, property owners often find themselves in a land rich and cash poor scenario. Most traditional banks will not even consider requests from property owners looking to pledge their land as collateral for a loan. This is the case regardless of net worth, income or credit score. If you need to tap the equity in your property, private non-bank lenders are a viable option. If you are considering using a private lender it is important and that you check out the lenders Better Business Bureau Ratings and Licensing status.
The amount a private lender would be willing to lend will vary based on location, zoning and market conditions. Typical loans are 30 to 45% of value. Rates can vary from 9.5 to 14%. Most private lenders will charge loan origination fees ranging from 1 to 3%.