What do private lenders look for in a borrower?
I’ve said it before and I’ll say it again: This is a people and relationship business; It’s not about real estate! Yes, we transact, operate and profit from real estate, but let’s face it: there are no people… no deal!
We also spend much of our time lending to borrowers we can trust. My job is to raise money from investors to finance your mortgage and TRUST is the only word that matters to achieve it. If there is no trust, there is no deal. Investors who participate in our mortgages trust that we are putting their funds in the hands of trusted people.
Good borrowers also have:
1. Leadership Skills – Let’s face it, there are a lot of moving parts in real estate business and possessing the internal leadership skills to guide contractors, accountants, attorneys, and other stakeholders and participants to get the profit you deserve on your business. treatment is critical. This does not mean abusing power or privilege, it just means having the ability to inspire and guide those who serve your project effectively.
2. Exit Strategy, Exit Strategy, Exit Strategy: Your project must have a solid profit strategy, and that’s a direct result of knowing exactly how you intend to exit the deal and withdraw the mortgage funds. Disposal of the property through a sale is the most common method, but refinancing with another, longer-term lender, such as a bank, is also frequently relied upon. In the end, your lender will have to be satisfied that the higher interest rates you’ll pay will be addressed and withdrawn within the time frame you and the lender agree on.
3. Know the answers – There is no better way to start building credibility than knowing the answers to questions about your business during meetings and other communication moments. This does not mean that you have to be an encyclopedia of definitions and details. However, it does mean that you know the answers to most questions, and you know where to get the answers to the ones you don’t know.
4. He is the person to go to: throughout the life of the loan, from application to full settlement of the property, someone should be the key contact. Nothing is more frustrating than dealing with multiple people when evaluating a deal. That is not to say that other stakeholders and key people in the deal should be ignored. The principles, officers and directors of the borrowing legal entity have contributions to the process of evaluating the agreement. Invariably, their knowledge, value, and contribution to your business are critical. What I am saying is that someone should be the project leader and be as available as possible for communication purposes. If you don’t feel as comfortable discussing certain parts or sections due to knowledge limitations, make sure you participate in all meetings with designated people from your team to make communication more fluid and efficient.
