Real estate deals involving private money lenders can be some of the most lucrative in the industry for both the borrower and the lender. While many of them resemble traditional bank-financed deals and are comparatively straightforward, others are slightly more complicated and require a host of qualities to deal with them. Any business person who wishes to work with a private money lender or avail themselves of a loan should keep the following five qualities in mind.
Responsiveness - Get the Deal Done
Business deals are usually time sensitive matters. As such, most parties are interested in consummating them as quickly as possible. Everyone understands the need for due diligence but no one should needlessly prolong the finalization of a deal due to neglect or indecision. A swift answer, even if negative, is always appreciated.
Patience - Wait for the Right Deal
It sometimes hurts to pass up a seemingly lucrative deal. Nevertheless, wait for one that meets your financial goals and also fits your risk tolerance. The interest lost over a few weeks or months will be repaid many times over by a deal that leaves you unstressed and comfortable. With first trust deed investing, patience is, indeed, a virtue.
Flexibility - Make the Deal Work for Everybody
One of the main advantages of first trust deed investing and private money lending is the flexibility it affords to borrowers. Of course, you should never enter a deal that you don’t understand but an open mind to alternative, non-traditional financing options will deliver a greater variety of loans for the investor to choose from. In short, an astute investor with flexibility will see far more deals than one who is bound by his own preconceptions.
Fairness - a Win-Win Situation is Best for Everyone Involved
Recognizing the fact that private money lending is an ongoing process and not a “one-shot” deal is the first step for a successful investor. Private money lending is based on relationships. The most successful investors understand that the long term gains will overshadow any accommodations made in the short term. It is imperative to understand that the borrower and the lender must find common ground that benefits them both.
Experience - The Culmination of All the Others
“Experience” is an overused and often misapplied word. In the case of private money lenders, it is quite simply the combination of all the previously mentioned attributes. Do not simply find an “experienced” private money lender. Instead, find one who is responsive, has patience and flexibility and deals fairly and you will find the best, most experienced private money lender of all.