Private Lender Experience Matters

/Private Lender Experience Matters

Experience Matters

By |2018-08-07T02:37:35+00:00June 11th, 2018|Investor Perspective, Private Lender|0 Comments

Working with a private lender who speaks the language of real estate can have a big impact on your project and your business.

If you are looking for financing for your latest real estate investment project—whether it is a fix and flip, a buy and hold or a new property you are developing—you probably started your search with a traditional lender. If so, you may have been frustrated by the process.

Why is financing with traditional lenders so frustrating? After all, they have products designed for real estate, right? Well, yes and no. They do have products designed for residential buyers, but they don’t really have the flexibility to create products geared toward real estate investors and their projects. In many ways, the whole process of a traditional lender is the opposite of what an investor requires. Why?

  • Time-consuming processing means more carrying costs for your project, including property taxes, utilities, interest payments, retainers and marketing costs.
  • Narrowly defined product offerings mean less flexibility for your individual project needs and goals and the inability to structure the project the way you like to work.
  • Focusing on individual transactions ignores the flow and movement required for a productive investment business, including the ability to cross-collateralize.
  • Stringent regulatory requirements add time and remove flexibility throughout the process, and layers of bureaucracy slow down the process even more.

How can real estate-focused private lending help? Because of their focus on real estate and real estate investment, private lenders can provide products and processes that conventional lenders and loan products can’t even approach. Here are just some of the benefits of the real estate experience a private lender brings to the table.

Flexibility to Structure the Deal

A private lender can add value by structuring the deal the way you need it. That means a range of available funds, a range of possible interest rates and a range of acceptable application guidelines. A private lender, for example, can eliminate worries that your credit score will be five points below a bureaucratically-defined “acceptable” level or that there will be an arbitrary limit applied for how much you can borrow on your project.

You’re not waiting for word from on high about your deal, because a private lender is the decision-maker. That means you can discuss terms that make sense for your lender’s business and yours, without a lengthy waiting game. It also means that you can discuss the project with your lender, knowing that your lender understands the needs and requirements of your business.

Fast Application and Closing Process // The standard bureaucracy of a conventional lender involves scores of lenders, underwriters, reviews and more. Those layers of middle management slow down both the consideration of the application and the funding and closing of the loan itself. And, after the closing, you’ll hope and pray you never need to ask a question about or adjust the terms of your loan—you won’t even know where to start.

With a private financier, the buck stops at your lender’s desk. You get your questions answered, application approved, and loan funded faster and efficiently. That means fewer days in process, lower carrying costs and quicker turnaround from purchase to monetization.

Lending Based on After Repair Value (ARV) // Most investment properties require construction—whether a new build, a fix and flip renovation, or a rental property needing a quick refurbish. Traditional lenders only lend based on the current market value of the property, leaving you to figure out financing for construction and rehab on your own.

By contrast, private lenders’ real estate knowledge and market insight allows them to structure your loan based on the projected value of the property after building, improvements or updating. With one loan encompassing all your project needs, you’ll spend less time managing finances and more time making the project the best it can be.

Diversification of Properties and Exit Strategies // Conventional real estate lending is based primarily on one scenario: Buy and hold as-is for many years before eventual resale. But real estate investment offers a variety of exit strategies and property uses—from short-term fix and flips to long-term buy and hold, from new construction projects of just a few months to large-scale multi-family properties requiring ongoing financial monitoring and adjustments.

By working with a private lender, you can structure the loan to the particulars of your project. Need construction or rehab costs factored in? Check. Need the ability to extend the loan terms if construction is delayed by weather or labor shortages? No problem. Want to convert a short-term loan scenario into a long-term buy and hold? That can be accomplished too. By providing a variety of options and custom designed loan products, a private lender ensures the best possible results no matter what your next project brings.

With options for residential and commercial projects, resale and rentals, and a variety of loan sizes and structures, you’ll find that working with a private lender to fund your next project is easier than you think.

By |2018-08-07T02:37:35+00:00June 11th, 2018|Investor Perspective, Private Lender|0 Comments

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