Hard money lending is a very different animal than traditional lending for real estate investing. Instead of dealing with an employee checking off boxes in a file, when you work with a hard money lender, you’re working with an investor just like you. This means that your communications can be much more direct and much more symmetrical. After all, your lender is looking for the same thing you are — a profitable transaction.
Hard Money Lenders Want Deals
When you work with a traditional lender, the loan officer’s primary job is to protect the bank by not making bad loans. If he makes a good loan, nothing much will happen but if he makes a bad one, he could get fired. A private lender comes to the transaction knowing that there’s a cost to not making a loan. If he can’t work something out with you, his money will continue sitting at a low rate of interest. With this in mind, the best hard money lending conversations are held from an attitude of trying to make a deal happen, rather than trying to prevent one.
Be Prepared With A Deal Story
Since private lenders are investors like you, they’re usually looking for a deal story, just like you. This doesn’t mean that they are looking to make foolish or reckless loans. Instead, it means that hard money lending is about more than just checking boxes in the file. Exact numbers might not be as important if you can answer the lender’s questions and show how it is a good loan for him to make. This is one of the reasons that investors turn to hard money lending for deals that are lucrative but also outside of a traditional lender’s box.
Be A Partner
Hard money lenders can be partners. The nature of their financing means that they will take a more holistic view of you and your application package, just like a partner. In addition, many of them are former real estate investors. Talking with them like a partner won’t just make it easier to build a relationship that could lead to a closed loan. It could also give you the advice that you need to turn an almost-failed deal around or to turn a good deal into a great one.