3 Tips for Brokers New to Hard Money Lending

For brokers that are assisting property investors with finding loans, it can be difficult, especially if the borrower can’t get a traditional loan through a bank. That’s where hard money, or private money, loans come in. Although these types of loans are easier for risky borrowers to obtain, finding a good hard money lender is not as easy as it sounds.

Here are three tips for brokers new to hard money lending:

 

1. Capital Resources

 

When looking for hard money loan sources, it is important to understand that these loans typically have a term of one year or less. However, the term can be seven years or more. In order to meet the needs of the client, you have to be absolutely sure that the lender has enough capital to fulfill multiple loans simultaneously. Experienced hard money lenders should be able to handle short-term loans, as well as medium-term loans. If the lender cannot fulfill the needs of your clients adequately, there is no point in dealing with them – move on and find one that can.

 

2. Fast Processing Times

One of the reasons borrowers look for hard money loans is that they need the money quicker than what a traditional lending institution can provide. For a real estate investor, the ability to get their hands on funds faster than a competitor means they have a better chance of scooping up a hot property. For developers, obtaining funds sooner rather than later means less chance of construction delays and faster time to market. Either way, as a broker, it’s your job to make sure the lender you choose can get the funds released as fast as possible so your clients can move on and make some money.

 

3. Choose Experienced Lenders

The last thing you want to do as a broker is to deal with an inexperienced hard money lender, especially if you’re not experienced yourself. Look for a lender that has a track record and has proven themselves in the industry. Get referrals, pay attention to industry news, and stay away from anyone just entering the marketplace. Let them practice on someone else. Reliability, trustworthiness, and experience all go hand-in-hand. Don’t settle for a lender that is less than exemplary in all of these areas. Your clients will be happier and so will you.

 

When it comes right down to it, choosing a good hard money lender for your clients really does come down to common sense. If the lender has a good reputation, experience, plenty of capital, and the ability to fund the loan quickly, then you’re on the right track. Call us at California Private Money Lenders 707-315-1119 or fill our broker’s form or our contact form and we will assist you in getting the hard money loan you need for your clients.

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What is Your Private Money Loan Exit Strategy?

Borrowing Private Money

 

Once you’ve made the decision to borrow private money, you must know what your exit strategy is and it is wise to even have multiple exit strategies.  Without a clear exit, you will never get a private money lender to give you the time of day or a loan!  Why, because private money or hard money loans are short term solutions, not long term borrowing or loan solutions. Private money loans can be the perfect solution for many personal, commercial, investment, and business challenges, but having an exit strategy is paramount to getting the loan and thriving through the process.

 

Masterminding Your Private Loan Exit Strategy

In the process of devising a clear exit strategy it is crucial that you mastermind your various options with your partners or members of your advisory team.  Many times, you and your partners haven’t thought of everything that could happen. This is an excellent opportunity to brainstorm the “what ifs” and come up with reliable solutions.

 

The exit strategy you have devised could have some holes in it that you hadn’t considered.  This is another reason why you should seek the advice of a trusted private money broker when pinpointing your exit strategies.  An experienced broker has seen many deals pass over his or her desk and, on the negative side, has also seen many deals go bad usually because of poor exit strategy.  A good broker can help you and your partners trouble-shoot your proposed exit strategies and get clear on what you will do if the following scenarios happen.

Private money lending can be an amazing solution to so many situations that a traditional loan can’t or won’t address. Give us a call today at 707-315-1119 or fill our short borrower form or contact form and one of our private money lending professionals will be in touch promptly.

 

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