Private Lending

Fast, Flexible Financing Solutions

Fewer Requirements
Fast Funding

INSIGNIA Financial Services seamlessly provides real estate investors and commercial property owners fast, efficient access to a robust network of private lenders, family offices, and asset-based loans with flexible terms for a wide variety of property types.

Performance

We are client-centric and performance driven dealmakers. Your success is our success.

Specialization

We're seasoned lending professionals with thousands of loans funded.

Transparency

We provide a transparent engagement, diligence and closing process.

Certainty

Capitalize on more opportunities with greater certainty of execution.

Broad Eligibility

We finance a wide range of properties, including apartment buildings, single family rentals, vacation rentals, assisted living, hotels, mobile home parks, retail, senior housing, and more.

Our team arranges financing for real estate investors and business owners. We are flexible, easy to work with, and we’re highly experienced dealmakers providing our clients certainty of execution.

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Private Capital

Opportunistic dealmaking
Fund within 5 days
Stabilized and Pre-stabilization
Commercial and residential
6 - 24 month terms
Foreign Nationals eligible
Fixed rates

Bridge Loans

Bankruptcy / DIP
Discounted payoff
Fixed rates
Foreign Nationals eligible
High leverage available
Note acquisitions
Terms from 6 - 24 months

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Receive a custom quote for your specific financing needs

Build to Rent

Fix & Flip Loans

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What is Private Lending?

Many real estate investors know that financing investment real estate is different than financing a primary residence. Among the differences is that many homeowners will seek out conventional mortgage financing, while real estate investors must often look for alternative forms of financing, whether commercial loans or private financing. That’s why as a real estate investor, it is crucial to understand how to fund deals using resources like private money lenders and private lending companies.

Who are private lenders and how exactly do private money loans work?

Private Money Lenders

Private money lenders are typically individuals who provide financing to real estate investors directly with their own funds. These individuals often times are experienced real estate investors or other professionals who are familiar with real estate investment, lending, and/or investments and are simply seeking a higher yield on their capital than they believe they can achieve in the publicly traded markets, such as stocks, bonds, and other investments.

Private Lending Companies

A private lending company is a non-bank financial institution that is in the business of taking funds from private investors and making private business purpose loans with those funds.

Oftentimes, the terms hard money lender and private lender are used interchangeably due to the similarities both possess. Both will lend based on the “hard asset value” or the property/collateral itself, but private money lenders will also take into account additional factors such as the borrowers’ credit history, available cash, and real estate investment experience and/or track record.

Private lending companies provide private credit to real estate investors from capital sources that may include individual accredited investors and structured credit from parties such as banks, hedge funds, and private equity firms.

Private Lending Misconceptions

There was once a negative connotation tied to private money lending and the industry’s reputation was associated with high interest rates. However, there are many benefits to working with a private lender:

Efficiency: Private lenders can typically fund a loan in 7 – 10 days
Less restrictive rules: Private lenders make loans for commercial business purposes to investors and commercial property owners, not consumers, and therefore are able to provide a less bureaucratic process and more creating financing solutions.
Value-add funding: Private lenders are able to make bridge loans for substantial rehabilitation, reposition, or stabilization, and can consider a property’s after repair value (ARV) or stabilized value in making a decision and determining loan size, including interest reserves.

The Downsides of Borrowing from Individuals

If you can find an individual investor to finance your project, that’s great, but here are several drawbacks worth considering.

Individuals generally have limited funds. At some point, they will run out of capital, and then you’ll have to find other investors.
Unreliability. You may be trying to close a deal and can’t get the funds because your individual investor is on vacation.
Their lack of experience with private lending can lead to legal action if anything goes wrong.
The pricing may not be lower than what you’d pay to a professional private lending company. Some individual investors have unrealistic yield expectations.
Individual investors don’t have a public reputation to maintain, so there is a higher risk of unethical behavior such as price gouging, bait & switch, or loan-to-own.

The Advantages of Private Lending Companies

While there may be benefits to borrowing from individual private lenders, there are clear advantages to borrowing from professional private lending companies. Many real estate investors and brokers refer to them as “hard money lenders,” but “hard money” is an unpopular term within the lending industry. While some companies embrace the term, most hard money lenders now prefer to be described as “Private Lenders.”

Lending Companies Don’t Run Out of Capital

Unlike individual private lenders, private lending companies are seldom without capital. Since they are in the business of lending, they are continuously recycling funds by one of several business models:

Fund and sell to institutions
Fund and sell to individual investors
Manage a mortgage fund (pools money from multiple passive investors)
Use a bank warehouse credit line
Syndicate each loan to multiple individual investors
Table funded by individual investors

Ironically, some private lending companies use individual investors to fund their loans, which can be considered brokering. This is a popular model in California and Arizona. Most of those individual investors would not work directly with borrowers because they prefer to have a license private mortgage professional underwrite and process the loans they invest in.

Private Lending Companies Manage Reputational Risk

One clear advantage of working with such private lending companies is that they have a public reputation to uphold, which tends to discourage unethical and unprofessional practices.

Private lending companies consist of a lending operation and their customer service is typically better than individual private lenders. Phone calls and written communications are equal or better than what you would expect to find with any institutional lender or bank. The private lending business is all about communication, expectations, and performance.

Private lending companies can be a great resource to real estate investors beyond just funding. If you plan to refinance into a long-term loan, they can refer you to a lender or arrange the refinance loan for you. Private lending companies can refer you to contractors and other key vendors if you need to assemble a team or need advice. Many private lending firms are managed by real estate investors who have substantial experience.

The reputation of private lending companies is a significant reason why they are typically recommended over borrowing from individual investors or individual private lenders. Many private lending companies belong to a private lending trade association that mandates its members to follow a code of ethics. Our industry has 2 major trade associations: