Unconventional Lending: Financing Off-Market Real Estate

If you’re a real estate investor looking to expand your portfolio, chances are you’ve already explored traditional lending options. However, many investors are turning to unconventional lending methods to secure financing for off-market properties in today’s competitive market. These alternative forms of financing offer unique benefits and can be a game-changer for investors looking to stay ahead of the curve. Brandon Gilkey explores the concept of unconventional lending and how it can be used to finance off-market real estate deals.

Types of Unconventional Lenders

Several types of unconventional lenders offer financing options for off-market real estate. One option is hard money lenders, private or direct lenders. These lenders provide short-term loans and typically have less strict eligibility requirements than traditional banks. Hard money loans have higher interest and fees but can be suitable for investors who need quick access to capital for off-market properties.

Another type of unconventional lender is crowdfunding platforms. These online platforms connect real estate investors with a large pool of individual investors who crowdfund the loan, making it possible to secure financing for off-market properties without going through traditional banks. Crowdfunding loans can have competitive interest rates and fees, and the process is often faster compared to traditional lending methods. However, crowdfunding loans may have stricter eligibility requirements and a shorter repayment term.

Benefits of Unconventional Lending

Unconventional lending offers several benefits for investors looking to finance off-market real estate. According to Brandon Gilkey, one of the main advantages is the flexibility and speed these lenders can provide. With traditional banks, the loan approval process can take weeks or even months, whereas unconventional lenders often have a quicker turnaround time. This can be crucial when dealing with off-market properties, which may require a fast and decisive decision to secure the deal. Additionally, unconventional lending options may be more lenient regarding eligibility requirements, making it possible for investors with less-than-ideal credit or financial history to obtain financing.

Another benefit of unconventional lending is the potential for higher returns. Hard money lenders, for example, often charge higher interest rates and fees than traditional banks. This can result in a higher return on investment for investors. Crowdfunding loans may allow investors to diversify their portfolios using a single platform. This can minimize risk and potentially lead to higher returns.

Risks and Considerations

While unconventional lending can offer investors several benefits, risks and considerations exist. One potential risk is the higher interest rates and fees associated with some types of unconventional loans. Investors should carefully consider the cost of financing and compare it to the potential returns before deciding.

Another consideration is the potential for stricter eligibility requirements or shorter repayment terms. This can make it challenging for some investors to obtain financing or may require them to have a more aggressive repayment plan. It’s important to thoroughly research and understand the terms and conditions of any unconventional loan before proceeding.

Final Thoughts

Unconventional lending is a viable option for investors financing off-market properties. Its flexibility, speed, and potential for higher returns offer an alternative to traditional financing methods. However, it’s important for investors to thoroughly research and understand the risks and considerations involved with unconventional lending before deciding. By carefully considering their options and following the tips outlined in this article, investors can increase their chances of finding and choosing an unconventional lender that best fits their needs. And with a solid plan, they can secure the necessary funds to make successful investments in off-market properties. 

Brandon Gilkey is the CEO of Investor Deals Today, one of the industry leaders in Single Family Residential Portfolio transactions in the United States. In addition to this, he is the Managing Partner of four Real Estate Holding companies with properties in different states.


Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.