Start the year strong with private lending partnerships that unlock more deals for investor clients
Where should I send this loan to ensure I’m getting the best deal for my client? This is a question brokers should be asking themselves every time they receive a loan submission. Having one lending option for real estate investor clients is doing them a disservice because of the options available in the marketplace.
One specific option that can be eye-opening for both brokers and investors is the private lending industry. A growing number of lenders are popping up in the space to provide an alternative source of funding to the typical conventional lending or bank funding.
Private lending is specifically geared towards the investor client, and it allows brokers to get multiple quotes for their client. It’s important to have multiple outlets for a client so if there’s ever a need to pivot to a more efficient, streamlined option for the loan it can be done so quickly. There are many steps in the process when it comes to a successful loan closing, and a private lender checks a lot of important boxes along the way that can help any real estate investor in the business.
Efficient qualification & application process
From start to finish, a private lender understands that time is money in the real estate investment industry. If they are dragging their feet throughout the loan process then they will consistently lose business to their competitors and other funding sources. The moment a broker reaches out on behalf of their client regarding a loan, the deal process should begin for an account executive at a private lender.
Private lenders understand the importance of making their loans a little easier to qualify for and making the approval process simple and repeatable. With lower FICO score requirements and less documentation requirements, the barrier to entry into the real estate investment industry is much easier when working with a private lender. The goal for private lenders is to make the first transaction an efficient one in the hope that it will lead to repeat business. These lenders cater to the investor client to forge a partnership that benefits both parties from a long-term perspective rather than a one-and-done approach to business.
Access to more deals
Truly a perk designed for savvy investors, private lenders in no way want to inhibit a broker and their investor clients track to success. This aspect is one of the main reasons it’s so appealing to work with private lenders. Conventional lenders or bank funding will typically have a tipping point where the debt an investor takes on is too much for them and the client is considered risky from a financial perspective. However, with private lenders, an investors debt to income ratio is not an obstacle to secure more funding. This can lead to funding multiple deals at the same time and if this opportunity is exercised over time it can be extremely lucrative for all parties involved: investor, broker and lender.
There are also the deals that investors try to get funded that tend to get much more complicated than a standard 30-year mortgage on a primary residence. Private lenders have grown accustomed to these deals with more nuance and will work with the investor to find a solution. The coupling of funding multiple deals at the same time and funding deals that regularly get turned down at other financial institutions is one of the ways private lenders have risen to the top regarding funding investment properties.
Competitiveness fosters faster closings
Finding a proven private lender can be vital for a broker because they are partnering with a company that understands the nature of the industry. Real estate investment is a highly competitive space where speed and precision are of utmost importance on every deal. Investors are more inclined to work with brokers that respond quickly and have the answers they want to hear. In turn, brokers should seek out private lenders that respond to their questions and their clients’ needs in a swift manner.
Private lenders understand they can be the difference in whether a broker chooses to send deals their way, so the onus is on them to be efficient when the ball is in their court. That ownership is extremely beneficial to all parties involved and private lenders that understand this have the best reputation in the industry. An investor who is consistently adding to their portfolio thanks to the work of their broker and a private lender will push to have most if not all their deals to be sent that way. Finding a proven process that works is an ideal place for an investor to be, and a broker and private lender want to be those missing pieces of the puzzle.
Vet private lenders to start the year strong
The best way to get business generated and headed in the right direction is for brokers to vet the private lending contacts they currently have in the industry. Schedule a call and be prepared to ask the right questions about programs, process and what the most successful brokers and investors that work with them consistently do. These lenders are always eager for more business and would be happy to field calls such as these to add their pipeline. After those initial conversations are had and a broker feels confident they’ve found the right partners they can relay the playbook to their investor clients, so everyone is on the same page. With a strong partnership between lender, investor client and broker, the sky is the limit in terms of closed loans, commission and content clients.
This article was provided by RCN Capital
