BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
I get where you’re coming from about creative control—nobody wants someone else dictating every little detail, especially if it’s your vision on the line. But honestly, I’ve found banks to be a bit of a double-edged sword, especially when you’re working with a tight budget or not-so-perfect credit. The paperwork is just the start... I remember one project where we got halfway through and suddenly the bank wanted updated appraisals and extra documentation because the market shifted. That stalled everything for weeks, and we almost lost our contractor in the process.
With investors, yeah, they can be opinionated (sometimes way too much), but I’ve also had a couple who were surprisingly hands-off once they saw I had a plan and stuck to the numbers. One guy even helped me negotiate better rates with suppliers because he’d done it before. Sure, he wanted regular updates, but he didn’t care if I picked blue tile or green paint as long as the budget stayed on track.
I guess what I’m saying is, for folks like me who are always counting every penny and don’t have a ton of collateral, sometimes investors are actually less stressful than banks. At least you know where you stand—either they’re in or they’re out. Banks can change their minds midstream if something spooks them.
It probably depends on your risk tolerance and how much flexibility you need. For me, having someone who understands the ups and downs of building (and isn’t just looking at my credit score) has been worth giving up a small slice of control. Not saying it’s perfect—just that sometimes those “bank hoops” are more like moving goalposts than fixed hurdles.
BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
That’s a good point about banks shifting the goalposts mid-project—had a similar headache when they suddenly wanted a new environmental report halfway through a build. Out of curiosity, have you ever tried a mix of both? I’ve seen some folks use a small bank loan to keep investors’ equity down, but I’m not sure if juggling both would just double the stress or actually help spread the risk.
BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
Yeah, I totally get what you mean about banks moving the goalposts—had a similar thing happen when they suddenly wanted updated financials right in the middle of everything. I’ve actually tried mixing both, and honestly, it’s a bit of a balancing act. The loan kept investor demands down, but then you’re answering to two sets of people, which can get messy if timelines slip. On the plus side, it did help spread out the risk a bit. Just gotta be ready for double the paperwork...
Totally hear you on the double paperwork—been there, and it’s no joke. But honestly, spreading the risk like you did sounds smart, even if it means juggling more. Sometimes it feels like you’re just picking which headaches you want, right? Hang in there, it pays off when things finally line up.
Sometimes it feels like you’re just picking which headaches you want, right?
That’s the truth. No matter which way you go—bank loans or investors—you’re trading one set of hassles for another. Personally, I lean toward spreading the risk too, even if it means more paperwork and a few extra late nights. Banks can be rigid, and they’ll nickel-and-dime you with requirements, but at least you know what you’re getting into. Investors, on the other hand, can bring their own drama—sudden opinions, shifting expectations, and sometimes they want more say than you’d like.
I’ve had projects where I thought bank financing would be the “easy” route, only to get bogged down in endless underwriting. But with investors, I’ve also had folks try to micromanage every decision. At the end of the day, it’s about picking your poison and making sure you’re not overexposed if something goes sideways. The juggling act is real, but when it all comes together and the project pays off, it’s worth every headache.
