When it comes to working with private capital (hard money) lenders, first impressions count. Unlike traditional lenders where borrowers only interact with a middleman, a private lender is typically one of the decision makers who you need to convince to believe in you, your property, and your plan in order to gain their approval on your loan request. The following are six tips that will improve the impression you make on your private lender and help you achieve a smoother loan closing.

    1. Be organized. Before approaching your private lender with your loan request, make sure that you are prepared to explain the high-level details of your project (e.g., the amount needed, the objective of the loan, and the property type). It is crucial to present yourself as professional to make the best first impression possible.
    2. Know your project, inside and out. Once you’ve piqued your lender’s interest, you must follow up with more explicit details about the request presented in a clear and concise way. This will often include an executive summary as well as the following information: address, property description, current financials for the property (including current leases for any existing tenants), credit history, borrower’s financial information, and any other pertinent details (such as rent rolls, operating statements, or environmental reports).
    3. Be upfront and honest. Your lender will conduct due diligence before closing on your loan. This is likely to unearth any complications involved in the purchase or development of the property (e.g., tax liens, tenant disputes, credit problems). Lenders will be more willing to work with you on these issues if you are open about them from the beginning of the deal rather than hoping they don’t find out about it. Often, private lenders will have suggestions from previous experience on how to resolve many issues before or at closing.
    4. Show selectivity. While you can talk to multiple private lenders about your project and loan request, sending out mass emails to multiple lenders is unlikely to impress lenders and make them want to work with you. Treat potential lenders as you would any potential partner in your venture and show them that you understand their time is valuable.
    5. Keep in touch. Address any requests for information or other items from your lender promptly. Maintain open lines of communication with your lender throughout the loan application process and for the duration of your loan.
    6. Think local. Although there are a number of hard money lenders that operate on a national basis, finding a locally owned lender is always your best option. You will have a much greater opportunity to check their reputation and their local references. As in many other aspects of business, there are good hard money lenders and not so good ones. You need to make every possible effort to end up working with one of the good ones.