What is a Private Money Loan and How Do I Get One


Private money loans are nothing new; they are simply the result of people who have money, loaning it to people who need money. Private money loans simply create a direct path from lender to borrower, eliminating all the hoops involved in conventional bank lending.

A private lender looks at the asset that is being funded — in this case real estate, and based on the merits of the deal, loans a real estate investor the capital required to purchase a property and, often, the rehab money needed to get the property market ready.

In an interview with an NBC affiliate, Cogo Capital CEO Lee Arnold was asked about the difference between a traditional bank loan and a private money solution for a real estate investor:

“If you go to a bank, you’re going to have a hard time qualifying regardless of your credit or your financial situation, simply because banks don’t want to lend on properties that are in disrepair…. They are looking to lend to the owner-occupant”

(Watch the entire interview here)

Anyone who has ever attempted to find conventional bank funding for a fix and flip knows that banks rarely lend on a property that needs work. Yet, those are the very real estate investments that generate the quickest revenue and allow the loan to be paid off the fastest. In addition, banks don’t lend on the future value of a property — the projected value after rehab. So where should you go for funding?

Private equity is the solution. Private equity funds pool money from investors who want to get a passive returns on their money. The “fund” is then beholden to its investors to deploy that cash on viable, safe and profitable real estate deals.

Cogo Capital is one such company. Our parent company Secured Investment Corp operates two equity funds and deploys the cash through loans written here at Cogo Capital.

What do I need to qualify?

It is refreshing to know that your credit score does not play a role in your approval; the deal you bring to us is what determines the amount of the loan we will give you. You just need to demonstrate that you can afford to “carry the loan” (or make the monthly payments), and ensure that there is room for you to make a profit.

What should I expect?

The first paradigm shift for most new real estate investors is this: unlike traditional real estate financing, where you would get your loan approval first and then go shopping, with private money you need to find your deal first and put that property under contract.

Cogo Capital lends investment capital at rates of 55% to 65% of the after repair value (ARV) of a property. The borrower will be required to bring the difference between the purchase price and the loan to the table. For example, if the purchase price and rehab costs for the property add up to $70,000, and if the ARV is $100,000, Cogo Capital can loan you $55,000. In this example, the investor would need to bring the difference of $15,000 to closing.

If you need help finding good deals, check out our online and live training and success building programs at www.LeeArnoldSystem.com

Cogo Capital lends only to legal entities like corporations, LLCs and similar legal structures.

You, the borrower, provides us with a purchase and sale agreement, a completed loan application, the articles of incorporation for the chosen active legal entity, a valid photo ID, Social Security card, EIN verification, two years of tax returns, your two most recent paystubs, and your three most recent bank statements, all designed to display fiscal solvency and your ability to make loan payments. For more information on our lending process look here .

Once Cogo Capital receives these documents from you, an appraisal will be ordered, and then the application will proceed to underwriting and funding. It typically takes us anywhere from 21-30 days to go from application to funding, although the process can be quicker depending upon how timely the required documentation is submitted.

The final interest rate, and fees associated with the loan vary from deal to deal and can be discounted in accordance with your payment history. Review our rates and terms sheet here.

Rule Number One, however, is get a deal under contract and call us at 1-800-473-6051 to discuss your options.


  1. Gary Myers


    Great article!! Working with Cogo Capital, I get excited to hear all the success stories about investors making tons of money fixing and flipping properties. Cogo Capital is a great source of funding and can eliminate several fears as a new Real Estate Investor. Most common question and fear in this business: “where do I get the money “?

  2. Robert Tavares

    Joe, Thanks for getting the word out about COGO Capital!

  3. -

    […] For more information on Cogo Capitals’s loan process see our article “What is a Private Money Loan and How Do I Get One” […]

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