What questions do you guys ask to make sure the hard money lender you're talking to is the real deal and someone you want on your team long term? I'm not talking about questions about reserves, credit requirements, and LTV requirements necessarily. What I'm wondering is what questions should I ask them to make sure they're trustworthy and legit? I've been talking to a lot of them on the phone, but since I'm a beginner, I don't have a lot to base my judgement off of. Thanks!
@Noah McPherson best way to find a trustworthy hml is to acquire a referral from a trustworthy person, as is the case for all vendors. Do you really know if a company can be trustworthy simply by speaking with them? Even if a vendor has performed poorly in the past and cut corners, would they share that information with a prospective client? Reviews are the name of the game and will give you all the information you need. Maybe this is not the answer you're looking for, but best to keep things simple and realistic. Find someone who has worked with the hml you're currently speaking with, and ask that individual how their experience was. Hope this helps!
@Noah McPherson , a lender can promise you they are the best lender ever before you even close your first deal with them. Perhaps they deliver on that promise, in your opinion - perhaps they don't. I'll give you a few good ideas on what to ask, but the best thing you can do to ensure you're dealing with a credible lender that is committed to your success is to talk to other investors who have already worked with that lender.
Here's a few ideas for questions you could ask:
1. How long have you been in business?
2. Do you require an application or due diligence deposit? The answer should be no, other than for any hard costs the lender may be incurring (e.g. appraisal).
3. Do you have an office in my area? If so, set up a time to pop by and meet face to face. I think you can get a much better sense of an organization by meeting with its representatives in person when possible.
4. How many deals has your average customer done with you?
5. How long has your 'oldest customer' been doing business with your company?
I hope this help...
@Michael Dumler thanks for the advice. I'll see if I can find someone who uses HMLs. All the people I've met who do BRRRRs in my area tend to use banks, but I'm sure there's someone out there using hard money.
@Jason Richards Great answer! I probably wouldn't have thought of those questions, but they make a ton of sense. Thank you
@Jason Richards pretty much hit the nail on the head. No two HMLs are the same.
Like Michael said above. The reviews will tell the story.
This is a business of referrals, it all comes down to trust and word of mouth.
I would also consider checking the BBB page for each lender you are considering.