Having a conversation with a Hard Money Lender

8 Replies

@Delmas Gibson ....your post is vague, so Jay gave you a vague response.  

How do you start a conversation with anyone?

"Hi, my name is Delmas, and I have heard you loan money privately to real estate investors, is that correct?"

Then the conversation will flow naturally from there.  Be prepared to discuss you deal, the upside, the downside, the risks and the rewards and your plans for how you can both benefit.  Most likely, once you introduce yourself, the lender will start to "pre-qualify you" based on your tone of voice, your professionalism, your facts, your plan, etc.  These guys are pretty savvy and will know in the first 30-60 seconds if they want to know more about you and your opportunity.  Let them drive the conversation.  Avoid "flowery" language that just fills empty space.

This isn't a social club meeting: you're speaking to a person who is probably running this like a business and has heard from a dozen other folks just like you today.  They only have enough money to back a few of you, so make your time count.  They want to know facts and your personal resume'.  Chit chat time will be reserved for after you pay them back fully, on time for your first deal, and they are pleased enough with your acumen and savvy to want to do more deals with you. 

Think of it like a job interview, but rather than a position, you are interviewing for the use of money.

Originally posted by @Erik W. :

@Delmas Gibson ....your post is vague, so Jay gave you a vague response.  

How do you start a conversation with anyone?

"Hi, my name is Delmas, and I have heard you loan money privately to real estate investors, is that correct?"

Then the conversation will flow naturally from there.  Be prepared to discuss you deal, the upside, the downside, the risks and the rewards and your plans for how you can both benefit.  Most likely, once you introduce yourself, the lender will start to "pre-qualify you" based on your tone of voice, your professionalism, your facts, your plan, etc.  These guys are pretty savvy and will know in the first 30-60 seconds if they want to know more about you and your opportunity.  Let them drive the conversation.  Avoid "flowery" language that just fills empty space.

This isn't a social club meeting: you're speaking to a person who is probably running this like a business and has heard from a dozen other folks just like you today.  They only have enough money to back a few of you, so make your time count.  They want to know facts and your personal resume'.  Chit chat time will be reserved for after you pay them back fully, on time for your first deal, and they are pleased enough with your acumen and savvy to want to do more deals with you. 

Think of it like a job interview, but rather than a position, you are interviewing for the use of money.

most reputable lenders these days have on line applications you fill those out first then they call you.. or e mail you..  

Updated about 2 years ago

also don't get sucked into advance fee schemes no lender should ask for money up front other than a very token amount maybe a 100 dollar app fee.. and appraisals if needed are paid to 3rd parties with you getting a copy of it.

Delmas, as Hard Money Lenders we want to know the following data points:

- Where is the investment property?

- How much is this property worth As-Is?

- Is this a fix&flip/bridge/rehab loan or a short or long term refi?

- If this is a purchase what is the purchase price?  If this is a rehab, how much rehab $?

- What is your credit score?

- How many flips etc... have you done?

Once we have this we can give you a reasonable idea of what our terms on a loan will be.

-------------------

Seasoned borrowers approach us with this data, we give them ballpark terms, they ask us to send a Loan application form. It takes about 3 minutes. Sometimes they have excellent questions - another 3 mins. They want to join my brokers program/network? Certainly! Another 2 mins.

Newbie borrowers sometimes call (I'll exaggerate here but all too often only slightly) ....

...wanting a long conversation (unless I can head this off at the pass) about their Real Estate Dreams, what is the difference between % of purchase and % of LTV, what does points mean, why can't I lend 100% of the purchase, and do I have creative ways of them funding 100%, go on at length about what amazing ARV this property has, how their credit score USED to be 800 but is now 510 and why this is so - in detail, can I do this deal in 3 days since they have spent the last 27 days of their contract apparently waiting for both neurons to meet up somehow, all about their troubles in life and somewhere near the end can I please lend them $30K even though the advertising they are responding to - but apparently didn't bother reading clearly says $80K minimum (and also answered most of their real questions)... usually all spoken really, REALLY slowly with long pauses while they write it all down in long hand and I have to repeat everything about 3 times AND they get offended if I try and cut this short by offering to just send them a loan application form so that I can give them a terms sheet sometime this century. During all this I have one incoming call after another hopefully going to voice mail, including our underwriters who urgently need my input regarding my $15 million deal that's meant to close at 4pm and I'm multitasking by writing on Bigger Pockets for stress relief (guess what type of call I'm on now?) as an alternative to taking out my slight hair-pulling impatience on my colleagues via judicious application of a baseball bat.

Consider being slightly more like the seasoned borrowers mentioned above and perhaps just slightly less like the latter example, and we should get on just fine. ;)

Best wishes.

Originally posted by @Benjamin Hurwitz:

Delmas, as Hard Money Lenders we want to know the following data points:

- Where is the investment property?

- How much is this property worth As-Is?

- Is this a fix&flip/bridge/rehab loan or a short or long term refi?

- If this is a purchase what is the purchase price?  If this is a rehab, how much rehab $?

- What is your credit score?

- How many flips etc... have you done?

Once we have this we can give you a reasonable idea of what our terms on a loan will be.

-------------------

Seasoned borrowers approach us with this data, we give them ballpark terms, they ask us to send a Loan application form. It takes about 3 minutes. Sometimes they have excellent questions - another 3 mins. They want to join my brokers program/network? Certainly! Another 2 mins.

Newbie borrowers sometimes call (I'll exaggerate here but all too often only slightly) ....

...wanting a long conversation (unless I can head this off at the pass) about their Real Estate Dreams, what is the difference between % of purchase and % of LTV, what does points mean, why can't I lend 100% of the purchase, and do I have creative ways of them funding 100%, go on at length about what amazing ARV this property has, how their credit score USED to be 800 but is now 510 and why this is so - in detail, can I do this deal in 3 days since they have spent the last 27 days of their contract apparently waiting for both neurons to meet up somehow, all about their troubles in life and somewhere near the end can I please lend them $30K even though the advertising they are responding to - but apparently didn't bother reading clearly says $80K minimum (and also answered most of their real questions)... usually all spoken really, REALLY slowly with long pauses while they write it all down in long hand and I have to repeat everything about 3 times AND they get offended if I try and cut this short by offering to just send them a loan application form so that I can give them a terms sheet sometime this century. During all this I have one incoming call after another hopefully going to voice mail, including our underwriters who urgently need my input regarding my $15 million deal that's meant to close at 4pm and I'm multitasking by writing on Bigger Pockets for stress relief (guess what type of call I'm on now?) as an alternative to taking out my slight hair-pulling impatience on my colleagues via judicious application of a baseball bat.

Consider being slightly more like the seasoned borrowers mentioned above and perhaps just slightly less like the latter example, and we should get on just fine. ;)

Best wishes.

love this post..   

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