What Makes a Good Private/Hard Money Lender

Question

When you are picking which lender to finance your project... What makes the difference in a Good lender and a Bad one? What are you looking for to help you grow your business?

Stephanie P. · Answer

In my experience, the thing that differentiates a good lender vs bad is communication. If you can't get someone on the phone or if they don't ask you questions to find out what's most important to you and your deal, then find someone that does and will. You need a broker that understands your requirements and your goals so they can send you to the proper lender. We ask a ton of questions up front so we know where to send your loan.For exampleBorrower is trying to buy a property, but can't season the funds to close. There are ten lenders out there that will do a DSCR loan, some to 85% loan to value, but there's only one that will do it without seasoning on title. If the borrower isn't interviewed up front, and asked some very important questions, that loan could end up going to one of the nine that need seasoned funds, wasting valuable time (and money for an appraisal) before it gets denied and then sent to the right lender. In this instance, the rate doesn't matter because there's only one lender that will do the loan.Communications is key.

Jack Tulloch · Answer

Communication, timeliness, and certainty of execution. Communication is important in all aspects of life, especially within the mortgage lending world. You need to be aware of where the file is at in the process, what conditions still need to be met, and what to expect moving forward.Timeliness is also key. Getting your questions answered quickly, deadlines being met, and around the clock support can be the difference between PSA extensions not being needed or refinances getting done before a hard money loan maturing. Certainty of execution, arguably the most important, is what makes a lender stand out from the rest. Being able to rely on a lender to execute on a deal is what keeps brokers/borrowers coming back to them.

Jonathan Taylor · Answer

I am biased here but accessibility, trust, and relationship are very key in this competitive environment. Lenders are eager to get loans, as are brokers, so you as a client, need to feel confident and comfortable with whom you trust your loan with. A bad lender does not call you back, answer questions nor help you with your loan. Bad customer service basically. There are plenty of great lenders and you just have to find the one that matches your goals and personality.

Angela W. · Answer

Good rate, down payment that you're, are comfortable with, and programs that can help with your transaction. Aside from the product, look for someone that's responsive, knowledgeable, and is a problem solver. I'm always in search of a great lender. Right now, I have 2 go-to lenders that I use. Even then, I still shop to compare products. Angela Walter, Texas Attorney

Jewel B. · Answer

Lots of great info here!

Caroline Gerardo · Answer

Picks up the phone, delivers the truth, asks and gets the hard answers, is licensed to do what you need.

LaMancha Sims · Answer

@Jeff S. Well Said. I agree with everything you have said. Really like the fact that you do not cheapen your terms for what I call the fly by nite borrower.

Jeff S. · Answer

We form strong relationships will all our borrowers. This means occasionally meeting for lunch, phone calls to sincerely ask how they’re doing (with no mention of business), and taking an obvious interest in their success. Most borrowers are relatively insensitive to a point or percent and understand the value of the relationship. Not everyone is like that, however. Every once in a while, we’ll meet a prospective borrower who tries to negotiate us down and squeeze every dime out of a deal. This is the telltale sign of someone who couldn’t spell the word “loyalty” and won’t be around very long. Nothing turns us off more and we won't waste the time. Our terms are fixed. Even when the prices are good, few of us beyond the tightest of tight will shop where the service is lousy. We have no interest in doing business with them and have no problem attracting others who value a relationship.

Dominic Pizzi · Answer

Since all rates should be somewhat competitive between all lenders, I'd probably go with overall access. Relationships in this business are so important and being able to communicate with your loan provider regularly to get the up to date information you need is better than a little bit lower percentage in interest rate (just my opinion, others may feel differently).

LaMancha Sims · Answer

@Angela Walter, agreed. We have learned over the years that a lot of Investors do not understand what they need in a good real estate lender to get them to the promise land. (Making a ton of profits while leveraging other people money)