{"id":40843,"date":"2013-04-07T06:33:20","date_gmt":"2013-04-07T12:33:20","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=40843"},"modified":"2024-06-06T06:28:16","modified_gmt":"2024-06-06T12:28:16","slug":"2013-04-07-hard-money-lender-friendly","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2013-04-07-hard-money-lender-friendly","title":{"rendered":"Make Your Hard Money Lender Friendly"},"content":{"rendered":"

Comments in last week’s Private Lending<\/a> blog were made regarding the rigidity of some hard money lenders’ underwriting and approval process.\u00a0 I heard that readers\u00a0wanted typical hard money lenders<\/a> to be more ‘user friendly’.\u00a0\u00a0\u00a0 So, how do you make a hard money lender act more like your\u00a0family friend or acquaintance, who\u00a0lends you\u00a0money with less restrictive structure and\u00a0standards?\u00a0\u00a0\u00a0 How do you compel a hard money lender, who you really don’t know, to\u00a0make you a more borrower-friendly\u00a0loan?<\/p>\n

Present your loan to the hard money lender seeing the loan through the eye of the lender.\u00a0 What would be important to you if you were the lender?\u00a0 Lenders like mitigated risks with a fair return.\u00a0 Mitigating factors don’t take away credit risks, but they lessen the sting of potential risk.\u00a0 So how does a\u00a0borrower present a loan with mitigated risks?<\/p>\n

Let’s Count the Ways<\/h2>\n

1.\u00a0\u00a0“Profits cure a lot of ills, but cash flow pays the banker’s bills.”<\/h3>\n

I have a coffee cup with this saying I received from attending one of my corporate banking extended trainings.\u00a0 The quote is as relevant today as it was years ago.\u00a0 One way to mitigate risk for the lender is for the borrower to have consistent and sustainable cashflow from a verified source.<\/p>\n

2.\u00a0 Collateral is the lynch pin of the hard money lender’s business model.<\/h3>\n

If a borrower offers\u00a0acceptable collateral or\u00a0additional collateral for security, this mitigates other percieved\u00a0credit risks to the lender.<\/p>\n

3.\u00a0 Borrower experience goes a long way to mitigate credit risk to a hard money lender.<\/h3>\n

If a borrower is experienced in the field which the lender is making a loan, this produces warm and fuzzy feelings for the lender and the lender’s loan committee.\u00a0 An experienced borrower will better know how to navigate the unexpected proverbial ‘bumps in the road’.<\/p>\n

4.\u00a0 Personal guarantees make a lender feel more secure and creates a more desirable lending environment for the lender.<\/h3>\n

Neither\u00a0have I\u00a0rarely executed a personal guarantee in my corporate banking career nor have I ever executed one in my private lending business,\u00a0a personal\u00a0guarantee makes it easy to get a loan approved.<\/p>\n

5.\u00a0 Cash is King.<\/h3>\n

You\u00a0have heard that saying I am sure.\u00a0 Having cash on hand\u00a0shows a lender the borrower has the ability to create cash.\u00a0 Cash is\u00a0needed when business take a turn the borrower\u00a0was not expecting.\u00a0\u00a0It will also help making the lender’s interest payments.<\/p>\n

The Takeaway<\/h2>\n

Hard money lenders will do business with you\u00a0if you create a less risky loan through mitigated factors.<\/p>\n

To find a hard money lender in your area, check out the BiggerPockets Hard Money Lender Directory<\/a>!<\/em><\/p>\n

Photo: CarbonNYC<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Comments in last week’s Private Lending blog were made regarding the rigidity of some hard money lenders’ underwriting and approval process.\u00a0 I heard that readers\u00a0wanted typical hard money lenders to […]<\/p>\n","protected":false},"author":805,"featured_media":169953,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7403],"tags":[],"class_list":["post-40843","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-money"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/40843","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/805"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=40843"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/40843\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/169953"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=40843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=40843"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=40843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}