There are two ways by which one obtains funding when wanting to buy notes. The first are institutional sources while the second are private ones. The latter involves funding from individuals, small companies and even pension funds.
That said, here are 4 benefits of private funding:
1: Quick Funding
If you know private investors with funds, this is an edge over your competition. You can buy notes quicker than they can given the funds that you have at your disposal.
2: Flexibility
Private investors deviate from standards when the situation demands for it. Let’s say that you need to move a note quick but will need to get an appraisal. In this case, the approval might take too long even if it is a safe note. These investors will usually fund the note even before the appraisal comes through. This gives you a clear advantage.
3: Collateral Qualification
An institution might want to fully qualify you just in case the payor doesn’t pay you back. Alternative, private investors will fund you once they look at the collateral. In other words, they tend to look at the payor as well as the final recourse – the collateral.
4: Stability
Building relationships with employees at institutions is a good practice. That said, there are times when they get transferred to another relationship or branch. This will do you no good and can be frustrating as you will have to start over again. Now this issue doesn’t happen with private investors since they don’t change their policies.