What is the Best Way to Grow as a Private Lender

[Chris Seveney]

For those experienced in private lending: 

This question was posed to me in my membership group from an investor:

What strategies have been most effective for scaling your loan volume to $5M+ per month? I'm particularly interested in what tactics people have implemented for sourcing quality deals (not the I need 100% financing bs)

Would you:

1. Hire someone? (if so, salary or commission or both)

2. Expand Broker network?

3. Social Media / Paid ads?

Also would you focus on a specific target market you are familiar with and know the comps like the back of your hand and have boots on the ground ?

Looking forward to your insights

[Don Konipol]

Quote from @Chris Seveney:

For those experienced in private lending: 

This question was posed to me in my membership group from an investor:

What strategies have been most effective for scaling your loan volume to $5M+ per month? I'm particularly interested in what tactics people have implemented for sourcing quality deals (not the I need 100% financing bs)

Would you:

1. Hire someone? (if so, salary or commission or both)

2. Expand Broker network?

3. Social Media / Paid ads?

Also would you focus on a specific target market you are familiar with and know the comps like the back of your hand and have boots on the ground ?

Looking forward to your insights

There are probably many ways to go from $12 million annually to $60 million annually.  To choose the correct path for any particular business a number of questions need be answered first

1. How much risk are you willing to take?
2. How much capital are you able and willing to invest?
3. What is the minimum amount of profitability acceptable at a $60 million loan volume
4. Are you willing to change your current lending criteria?
5. How limited is your knowledge base?
6. How much time are you willing to devote to an expansion program
7. How much larger of an organization do you want to run
8. How much “control” are you willing to give up? 

I can tell you what we actually did.  My parameters were that I did not want to add more than 2-3 employees, I did not want to give up control over the u;to are yes - no investment decision, and I didn’t want my position to become a full time job.  We were successful by implementing a 3 part program

1. Greatly increased lending capital by transitioning from a ‘blind pool” fund to a series LLC / syndication model where investors know the property lending deal before committing to any loan and can “pick and choose” whichever loans they do or do not want to participate in.  Over 8 years this increased our capital base from $8 million to $50 million + 

2. Incensed deal flow by developing a large list of contacts of commercial mortgage brokers using LinkedIn.  I have 20,000 + commercial mortgage broker contacts on LinkedIn 18,000 of which have agreed to accept a monthly newsletter we email to them.

3. We hired a internet marketing person whose business consists exclusively of real estate clients who redesigned our website, initiated a program of SEO and social media marketing aimed both at deal flow (real estate borrowers and mortgage brokers) and capital (passive investors).

4. We lease a platform for online access and efficiency with both a lender and investor portal. This reduced time spent on mundane tasks - answering investor questions, sending out loan information, handling loan inquiries etc about 80%. 

5. We rent an environmental screen database that provides us with a 24 hour turnaround environmental screen and engineer evaluation of the report. 

6. Hired part time admin assistant and 1/4 time services of book keeping professional.