Private Lenders: How do you Approach?

Question

As a new investor, how do you approach private or hard money lenders? When working with them on wholesale and rehab deals, do they look at the personal financial and experience situation of the investor or do they look at the deal and make a determination of whether or not it is worth their time and money?

Thanks,
Kelvin

Thanks,Kelvin

John Thedford · Answer

Kelvin Letron Brantley

A HML or PML is going to consider the deal itself, risk, character of the borrower, capacity to repay, the collateral, experience, etc. When someone says they are an investor, I can ask for HUDs. I can also ask how many properties they own. That might be an indication of experience, ability, etc. I just loaned a guy 100K. I looked up and can see he controls at least 8 properties. I visited his office, saw his operation, etc. You cannot always judge by looks, but if they appear professional, have deals in the works, and have HUDs to back up experience I feel pretty good about lending to them. If they pay timely, I make money available for future deals. If they mess me over with slow payments, or I have to hire an attorney to collect I don't lend to them again. If you want to propose a deal, AND you are willing to put skin in the game, that shows your intent to honor the deal. The no money, no asset "investors" don't have anything to offer a HML or PML so they generally won't be considered seriously.

BTW-the guy that just borrowed invited me over to see the rehab I loaned on. He put in a good bit of cash which makes my investment even more secure. Foreclosure is NEVER a good option for either a lender or borrower but sometimes is necessary.

Kelvin Letron Brantley · Answer

@Stephanie Potter & @John Thedford, That makes a lot of sense.  As I am sure you have gathered, I am a new investor.  This gives me insight into how I need to position myself to do business with HMLs and PMLs.

Kind Regards,Kelvin

Stephanie P. · Answer

Hey Kelvin

Welcome to BP.

For us, rehabs are priced with the investors experience in mind. The more experience, the less cost/risk.

Stephanie