Private money lenders for real estate investors fill the gap when banks won’t fund distressed acquisitions, short hold periods, or LLC-vested business-purpose deals. Whether the capital comes from a wealthy individual or a private lending company like Jaken Finance Group, the structure is the same: short-term, asset-secured financing priced for speed and flexibility — not the lowest rate on a 30-year owner-occupied mortgage.
Jaken Finance Group operates as an institutional private lender with dedicated capital, standardized underwriting, and nationwide reach — the reliability of a firm, not a single angel whose wallet might dry up mid-project.
Where private money sits in the capital stack
Real estate investors access capital from four broad sources:
| Source | Examples | Speed | Typical use |
|---|---|---|---|
| Depository banks | Chase, regional banks | 30–45+ days | Stabilized rentals, owner-occupied |
| Agency / GSE | Fannie, Freddie (via lender) | 30–45 days | Conventional investment property |
| Private money | Individuals, funds, Jaken Finance Group | 7–14 days | Flip, bridge, construction |
| Equity partners | JV, syndication | Variable | Heavy rehab, ground-up |
Private money occupies the gap between equity and bank debt — faster than institutional permanent, cheaper than giving away 50% of the deal to a partner.
Private money vs. hard money vs. bank — comparison
| Factor | Bank | Individual private lender | Jaken Finance Group (institutional private) |
|---|---|---|---|
| Speed | 30–45+ days | Variable — often fast | 7–14 business days typical |
| Underwriting | W-2, DTI, seasoning | Relationship-driven | Asset-based + documented process |
| Capital depth | High | Limited to one checkbook | Institutional capital base |
| Entity loans | Sometimes | Informal | LLC standard |
| Rate (2026) | 6.5%–8.5% amortizing | Negotiated | 8.99%–13.5% IO flip/bridge · 5.75%–10.5% DSCR |
| Best for | Stabilized rentals | One-off relationship deals | Scale, repeat investors, geo diversity |
Further reading: Private money lending for real estate · Private money lending and real estate investments · Investor financing FAQs
Regulatory context — what investors should know
Private real estate lending operates outside traditional banking — but not outside regulation entirely:
- Business-purpose loans on non-owner-occupied property are not subject to the same CFPB Ability-to-Repay rules as consumer mortgages
- Securities laws may apply when pooling investor capital — institutional lenders like Jaken Finance Group structure offerings under applicable exemptions; individual note sellers should consult counsel
- State licensing varies — Jaken Finance Group originates nationwide under applicable state and federal frameworks
- Disclosure — get terms in writing: rate, points, term, prepay, extension, and draw policy
Differences from conventional: private money vs conventional loans
When real estate investors use private money
- Fix-and-flip acquisition — close before the auction or MLS deadline
- Bridge between buy and sell — carry a listed flip while the buyer’s lender catches up
- BRRRR bridge leg — rehab before DSCR refi
- Ground-up construction — vertical capital before permanent takeout
- Portfolio gap — down payment or carry when 100% leverage is not quite there
- Cross-state acquisition — local bank won’t lend on out-of-market collateral
Get approved · Loan programs overview
When NOT to use private money
Private capital is expensive by design — speed and flexibility have a price:
| Situation | Why private money is wrong | Use instead |
|---|---|---|
| Stabilized rental, 10-year hold | IO rates erode cash flow | DSCR at 5.75%–10.5% |
| Primary residence purchase | Business-purpose only | Bank conventional or FHA |
| Strong W-2, clean property, no time pressure | Overpaying for speed | Bank investor loan |
| Partner offers 0% family loan | Cheaper capital available | Family note with proper documentation |
| Deal needs $50M+ permanent | Private lender size mismatch | CMBS or agency |
| Sponsor has no skin in game + thin ARV | Lender will decline anyway | Raise equity first |
Jaken Finance Group private lending products
| Product | Use case | Rate band | Apply |
|---|---|---|---|
| Fix & flip / rehab | Buy, renovate, sell | 8.99%–13.5% IO | /submitflip/ |
| Bridge | Short-term carry | 8.99%–13.5% IO | /submitpurchase/ |
| New construction | Ground-up build | 8.99%–13.5% IO | /newbuild/ |
| DSCR rental | Stabilized hold / refi | 5.75%–10.5% | /submitrefi/ |
Related hubs: Asset-based hard money · Rehab loans · Bridge loans for investors · What is hard money
Institutional private money vs. angel capital
Individual angel private lenders can move fast on relationship deals — but capital depth is limited to one checkbook. When a sponsor scales to 3+ simultaneous projects, institutional private lenders provide:
- Repeat borrower programs with tiered LTC based on track record
- Dedicated draw inspectors in your metro
- Portfolio refi paths into DSCR permanent debt
- Proof-of-funds letters same-day for competitive offers
| Deal profile | Angel private money | Jaken Finance Group institutional private |
|---|---|---|
| Single flip, trusted partner | Often works | Overkill unless speed matters |
| 2–4 simultaneous rehabs | Capital constraint risk | Standard operating model |
| BRRRR with planned DSCR exit | May not offer refi path | Bridge → DSCR on same desk |
| Out-of-state acquisition | Unlikely | All 50 states |
Benefits overview: benefits of private money lending · navigating alternative financing
Due diligence on private money lenders
Before signing any private money term sheet — individual or institutional:
| Check | What to verify |
|---|---|
| License / registration | State mortgage or lending license where required |
| Track record | Closed deals in your asset class and state |
| Capital source | Dedicated fund vs. deal-by-deal raise |
| Draw policy | Timeline, inspection fees, change order process |
| Extension terms | Cost and notice period before maturity |
| Prepayment | Penalty or free payoff on sale |
| References | Other sponsors who closed similar files |
Red flags: hard money lender red flags · Proposal checklist: evaluating loan proposals
Worked example: private money on a fix-and-flip
Indianapolis SFR acquisition:
| Line | Value |
|---|---|
| Purchase price | $165,000 |
| Rehab budget | $42,000 |
| ARV | $265,000 |
| Total project cost | $207,000 |
Hard money at 90% LTC ($186,300):
| Item | Amount |
|---|---|
| Cash to close (10% + fees) | ~$28,000 |
| 6-month IO carry @ 11% | ~$10,250 |
| Total cash invested | ~$38,000 |
Exit at $255,000 sale: Net profit ~$22,000–$28,000 after carry, points, and selling costs.
Model your deal: fix and flip calculator · Indianapolis cash-flow markets · best neighborhoods to flip Indianapolis
Worked example: angel vs institutional on portfolio scale
Atlanta sponsor running three simultaneous rehabs:
| Factor | Angel lender ($400K max) | Jaken Finance Group institutional |
|---|---|---|
| Deal A | $180K funded | $180K funded |
| Deal B | $165K funded | $165K funded |
| Deal C | Declined — capital exhausted | $195K funded |
| Draw inspection | Sponsor-managed photos | Third-party inspector |
| DSCR refi on Deal A | Not offered | Submit refi at stabilization |
| Proof of funds for Deal D | 5-day wait | Same-day letter |
Scale breaks angel relationships — institutional private money is built for repeat volume.
Private money for ground-up and construction
Beyond flips, private capital funds vertical construction:
- New construction loans · Ground-up with no experience
- Build-to-rent financing
- Chicago infill teardown economics
Construction private money stays in the 8.99%–13.5% IO band with milestone draws tied to inspection — similar mechanics to rehab holdbacks.
State private lending hubs
Jaken Finance Group funds private money deals nationwide with metro depth in focus markets:
- Illinois · Indiana · North Carolina
- Georgia · Florida · South Carolina
- Washington DC · Best hard money lenders 2026
National overview: real estate financing for investors · guide to investment financing
Private money FAQ
What is a private money lender for real estate investors?
Private money comes from non-bank sources — individuals, mortgage funds, or private lending companies — secured by investment property. Jaken Finance Group operates as an institutional private lender with dedicated capital and standardized underwriting.
What is the difference between private money and hard money?
The terms overlap in investor use. Hard money usually describes asset-based bridge and flip loans from professional lenders. Private money can mean the same thing or an individual angel lender with informal terms.
Why use private money instead of a bank on investment property?
Speed, flexible underwriting on distressed assets, entity borrowing, and leverage on ARV — banks rarely fund fix-and-flip timelines or non-owner-occupied rehab at investor leverage.
Does Jaken Finance Group offer private money loans?
Yes. Jaken Finance Group is a private lending company funding fix-and-flip, bridge, construction, and DSCR products nationwide — not a depository bank.
Work with an institutional private lender
Need private capital that shows up on repeat deals? Get approved or submit a financing scenario — Jaken Finance Group funds real estate investors nationwide.
Further reading: power of hard money loans · hard money myths debunked · choosing hard money over traditional
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196