Bank or Private Money? Use the Financing That Gets the Deal Done

If the property is stabilised, the borrower is bankable, the documentation exists, and the closing date has room in it, a bank is usually the better tool. The rate is lower, the term is longer, and the amortisation is friendlier to cash flow. Nobody should pay private-money pricing for a transaction a bank will happily do.

The test is not whether a bank could theoretically approve the deal. It's whether a bank can approve it, appraise it, committee it and fund it inside the time you actually have.

A bank underwrites the borrower and the historical income. That works when both are clean. It stops working when the value is in what the property is about to become, when the borrower's returns show depreciation and write-offs rather than economics, or when the transaction has a hard date attached to it.

Those aren't bad deals. They're deals that don't fit a process designed for a different kind of transaction.

The comparison people make is rate against rate. The comparison that matters is the spread against the outcome. A few points over a twelve-month bridge is a real cost. Losing the deposit, losing the property, or losing an exchange is a different order of number entirely.

Run it the other direction too. If a bank will close in time, the flexibility of private money isn't worth anything on that transaction — you're paying for optionality you won't use.