In difficult lending environments it is often beneficial to think like a hard money lender. Step into their shoes and look at your deal through their eyes.  This can be difficult for a couple of reasons: 1) it is your deal and you are used to looking at it through your eyes, which may have an overly optimistic view; 2) who knows how lenders (particularly hard money lenders) think?

For issue number 1, we suggest talking your deal over with a trusted colleague who is not as actively involved in the proposal. This consultation can provide a more objective view as well as bring up questions to your attention that need clarification.

For issue number 2, here is our viewpoint (as a Colorado hard money lender) as to how people in our business consider loan requests.

Thinking Like a Hard Money Lender.

Does this loan meet our criteria? If a loan does not meet our criteria, most likely we will not even consider the loan request.

What is the real value of the property?  What the value of a property is often depends on who is giving the opinion and whether or not their judgment is swayed by self-interest.  Many private money lenders tend to rely on objective third party appraisals. These appraisals are based on the “as is today” standard:  What is the property worth today in “as is condition?” Not, what will it be worth in the future when certain things may happen or conditions may change?

What is the time frame of this deal?  Compared to banks or life insurance companies Colorado hard money lenders fund loans quickly, but certain time frames are out of lending realities.  Be careful of hard money lenders who claim to be able to fund in a few days – it could be a “bait and switch” type of offer.  Between two to four weeks is standard for Colorado hard money lenders.    The more orderly the borrower has their documentation, the more quickly a loan may close.

Finally, how transparent is the borrower? As a Colorado hard money lender with 41 years’ experience in this arena, our priority is to be open and candid with our borrowers.   In those cases where the borrower is open and candid with us, things proceed smoothly and quickly.  When the borrower does not take this path and attempts to conceal important information, the procedure takes longer and the outcome is less likely to be good.   When the borrower lays out all issues on the table at the beginning, we are comfortable.  Good communication is key.  Contact us with any questions and see what we can do for you.

This blog was written by [google_authorship] Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender.  Bob has been in the private capital lending business for 41 consecutive years.