The Etiquette Of Searching For A Hard Money Lender
Here’s another one for the “stories from the dark side.” It really lends to what kind of Business Etiquette you need to exercise when seeking funding in our industry.
Someone approached one of our affiliates recently looking to get funding for a deal in an area of Wisconsin that wasn’t exactly an easy place to get good values over $100K. This was a challenge admitted by the prospective borrower. In this area of Wisconsin it is pretty easily seen by even the “Z” word website that values were not quite what we would normally like to see. However, it was close enough that we could still see a way through to a deal.
Searching For A Hard Money Lender That Suits Your Project
After quite a few emails and phone calls, we were able to finally come up with something that underwriting was able to settle on as a viable risk to present to our investors. An LOI (Letter of Intent to Facilitate Lending) was generated and sent to the affiliate so they could pass it on to the prospective borrower. The Borrower apparently received the LOI, and then didn’t get back to us over a weekend.
Letter Of Intent
Letter of Intent, also known as LOI, that we generate have generally a four or five day offer limit. (obviously we can’t just leave offers on the table; our investors wouldn’t appreciate it) This one had until the first of July to sign and make deposit for inspection so we could move forward with process and get to a close. Not a word over the weekend and when we reached out to the affiliate, they said the last they heard was that the prospective borrower would be calling last Friday; only, there was no call.
This left us with a bit of confusion and curiosity of course. Realizing that this is still a run of numbers before we find a viable opportunity to lend on, we figured this one had finally gotten to the point that everyone could win on this deal. After having spent a few hours researching the property and finding enough evidence to back up the value enough to make an offer, an offer is extended. Most times, borrowers who truly understand what they are getting return LOIs immediately and make deposit so inspections can be done.
Hard Money Investors
This however is not your normal borrower. This one decided that “shopping” was a better offer than what we gave. Please note, we are fairly standard along with most competitors that work with challenged credit or challenged equity investors. Many of our seasoned investors have a reserve to work with so they can put skin into the game as our investors desire. We explain that this is necessary in order for a loan to occur. This person decided that our offer wasn’t enough and when our affiliate finally got a hold of them, they at that time said they were going to look further and may come back if they can’t find more favorable terms. This was met with a bit of rebuke by our Affiliate on the fact of time wasted doing our due diligence and them not having the courteousy to at least call and discuss terms to see what can be negotiated. Instead this person decided to just leave our offer behind.
Hard Money Lending Process
I can tell you, this has resulted in us raising our rates and fees next time around. Because we will go through the process again. We’re not the only ones that would do this. Many would double what end up raising rates or fees to. We’re actually one of the nicer groups.
Here’s the point to this story: If you are seeking more favorable terms and may need to shop your deal around, let the hard money lender/broker know what you’re up to. Then they put time and effort into it to get to a point of making a generic offer over the phone. Enough for you to see if it’s something you would like to pursue with them. If you do as the above person did, you can expect to meet with resistance to do business the next time around. Remember, they have the capital you need. Treat them with respect even if you’ve run into a sheister or two. You never know when you find the right one that will work with you, if you treat them wrong, we all talk, your reputation will be sullied and you will find it harder to get funding.
Searching For A Hard Money Lender: Michael Kaleikini
This article was written by Hard Money Lending Expert Michael Kaleikini. Mr. Kaleikini is a 15 plus year private money lending expert and the President and Chief Operating Officer of Hard Money Capital Group. Michael Kaleikini can be reached at email@example.com. If you are an investor looking to diversify your investment portfolio into private money loans and earn 10% or more in annual returns secured by real estate, Michael Kaleikini and his associates is your man. Michael Kaleikini has a stellar national reputation among professionals of the real estate industry as well as hard money loan borrowers. Michael Kaleikini is a household name in the hard money lending industry. Michael Kaleikini also has a team of residential mortgage loan originators who are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, and Jumbo Mortgage Loans.