Trust—THE element that most (if not all) private money lenders base their decision on when reviewing a loan request from a borrower.
Let’s be honest here, private lenders get approached by hundreds of real estate investors. Usually, they all have a strong business plan, an exit strategy and a formidable equity to reference as a security. Yet, they only choose to work with few.
Because those few applicants succeed in acquiring their trust, and so convincing them to do business with them.
So, the question is: What real estate investors can do to establish trust with private lenders?
Resourcing a vast network of private lenders, the team of GCP Fund Ltd. serves to facilitate linkups between borrowers and lenders. As such, we are well positioned to identify what works for real estate investors when it comes to establishing trust with hard money lenders.
And, to help you, we would like to use our experience and share some tips so that you too can be among those few applicants.
Tip #1: It’s All About Reaching Out to the Right People
We have been working with our pool of lenders for years. As such, we know which type of loan request would be entertained by which private lender.
You might be approaching prospective private lenders on your own. As such, you will need to identify by yourself the right people before you approach them.
How to identify the right people?
Well, since your investment project revolves around real estate, the criteria for shortlisting lenders should also resonate with the theme of real estate.
So, choose those lenders who own their own real estate. If they own their own real estate, they would know the value of your project.
Apart from that, here are few other things that you can choose to add to your shortlisting criteria:
- They often use postal services for sending mails.
- They should be local lenders.
What’s the reasoning behind integrating these elements to your shortlisting criteria?
Because if the prospective lenders use postal services for sending mails (in this age of emails), it points to the fact that they are fond of reading and writing.
Plus, it also gives you another communication channel through which you can send your proposal—arguably a more effective one than email, which at times, can go unread.
And, if the prospective lender resides in the same town or city that you live in, you can show them the property in which you want to invest. This can make them feel more comfortable about the prospect of loaning to you.
Tip #2: Leverage Your Credibility Portfolio
Once you have a list of prospective private money lenders, your next step should be creating a credibility portfolio.
This can be in the form of a dossier—a compilation of the pictures of the projects that you have successfully worked on, to date, with brief description about each project.
Content should be precise. You can also furnish a brief history of your career, testimonials from your clients, certifications, any interview that you have given to a local newspaper and informational reports.
Make an electronic copy of it and a hard copy. Send both through their respective channels. Leverage your credibility to establish trust with your prospective lender.
Tip #3: Leverage Your BBB Membership
If you haven’t joined Better Business Bureau (BBB), you should do it now. Many private money lenders like to check with the BBB to assess the credibility of a real estate investor. Finding you there on the list should help them to trust in your project and more importantly, you—as a business individual.
Buckle up – you have some work to do!
Do you have any questions about hard money loans and the lending process in general? Check out this helpful post to expand your understanding on the subject.