Private Money Lender (PML)
FinancingA Private Money Lender (PML) is an individual — not a bank, credit union, or institutional fund — who lends their own money to real estate investors. PMLs base decisions on the deal, the borrower’s track record, and personal trust, rather than FICO scores, DTI ratios, or loan committee approvals. This makes private money one of the fastest funding sources available.
How it works. You find a deal, structure it, and present it to a PML with a clear summary: purchase price, renovation budget, after-repair value (ARV), exit strategy, and the proposed return to the lender. If they like the numbers — and trust you — they wire funds, often within days. The loan is typically secured by a promissory note and a mortgage or deed of trust on the property. Terms are set by negotiation: interest rates commonly range 8–14%, with terms of 6 months to 3 years, and points (origination fees) of 1–5%.
Private money fills the gap between bank debt and equity. Because PMLs charge higher rates than banks but require far less paperwork, they are ideal for short-term rehab projects, bridge loans, and deals that need to close fast.
Example. You find an off-market duplex for $150,000 that needs $40,000 in work and will be worth $260,000 fixed up. A bank won’t touch it — too distressed, too fast a timeline. You present it to a PML you met at a local REIA meeting. They agree to fund 100% of purchase and rehab at 10% interest, interest-only, with a 12-month balloon. You renovate, refinance into a 30-year DSCR loan, and pay off the PML. They earn 10% on their money; you keep the spread and the asset.
Private money is a cornerstone of the capital stack and can be the key to no-money-down creative deals when paired with equity partners or seller financing.