There’s no correct answer to this question because the word “better” is so subjective. What is “better” for one investor may actually be worse for another, and vice versa.
You don’t want to make the mistake of categorizing lenders as “good” or “bad”. You should always consider all funding options, compare them based on the terms and conditions, and choose the one that suits your situation best. In short: do the math!
For example, if you will be keeping the property for a longer period of time, then choosing an institutional lender could be more financially beneficial for you because they typically have lower interest rates. Alternatively, if your real estate investment purchase is going to be short-term, meaning you intend either to wholesale it immediately, or rehab and sell it quickly, then the terms offered by a private lender may be a better fit for your needs because the higher interest rate is usually outweighed by the expeditious turnaround time and the reduced fees.
But the truth is that both of the prior sentences make huge unfounded assumptions based on generalities and lending norms, and that’s something you should never rely on when you’re deciding which lending solution is best for you.