If you’re looking for a private capital bridge loan (sometimes called hard money loans), then you probably already know that private lenders can approve and underwrite loans faster and more creatively than bank lenders with significantly less red tape. But do you know how to best present your private capital loan request to a potential bridge lender to secure the best terms for your project?

Here are four suggestions for how to best prepare your loan request and streamline the underwriting process to make a successful impression on a potential private capital bridge lender and get a funding commitment in time to take advantage of a fleeting real estate investment opportunity.

1. Don’t just throw numbers at your lender, paint them a complete picture. Loan applications for bank lenders may be dry and mechanical, but when you apply for a private capital loan, it is important to remember that you are meeting with the decision-maker directly. You should take time to tell a potential private lender about yourself, your project, and your vision for what their financing would enable you to achieve. This is especially necessary if you’re meeting with a private lender for the first time as private lenders are more interested in character than credit score, so humanizing your application with your own background in real estate investing and photos of past and present projects will increase your chances of receiving the funding you want.
2. Like a good scout, a good borrower should always be prepared. The faster you can provide supporting documentation for your loan request, the faster your lender can approve it. Although private lenders typically require less paperwork and financial documentation than bank lenders, you should be prepared to provide basic personal financial information, such as a personal financial statement, credit reports, and at least two years of tax returns, in addition to property-specific documentation including the purchase agreement, any appraisal or valuation that you have, and rent rolls or leases if it is tenanted.
3. Always be upfront and honest about issues with the project. Private lenders are known for their flexibility, but they can’t help you work around issues that you don’t tell them about. Many common real estate problems such as liens, judgements, defaults, and zoning or easement issues are not deal breakers if they are addressed early on in the lending process. Additionally, reputable private lenders will always conduct their own due diligence during the underwriting process, and if they find out later on about a problem that you already knew about, it can lower your chances of getting the financing because private lenders want to work with borrowers that they can trust to be honest with them.
4. Prepare and present an accurate budget. If your project requires any construction or rehabilitation, then you should have a line-item budget with estimates and bids from contractors ready to share with your potential lender. The better you can plan out and pin down the costs of your project ahead of time, the less likely you end up without enough funds to finish a project or end up paying for money that you didn’t need.

The bottom line is this: well-presented loan requests have a better chance of getting funded by private capital bridge (hard money) lenders because a private lender is also an advisor and partner on your project, not just a financier.

If you have a private capital loan request to present, contact Montegra at 303-377-4181 or loans@montegra.com.