If you have been considering starting a private lending practice, we'd like to offer the following tips from the Rules of Thumb blog and MoneyThumb. If you use these tips wisely, you can almost guarantee your success. The tips we are presenting below can also apply to improving your current private lending practice.
Stay local--It has been proven through the study of hard data that the private lending business model is most successful when focused locally. One great litmus test for your loans is keeping them within 100 miles of your office. You will succeed in funding loans because you are a local expert and you understand your local marketplace. By choosing this secret to private lending practice success, you are only dealing with who you know and where you know.
Discover your standard loan amount--Find out what amount of loans the majority of your investors range from and market this range as your niche. Be honest with your referral network about this amount.
Start small and build your book of business--If you are just starting out in your private lending practice, you will quickly learn that starting small is so much smarter than jumping into big loans as a beginner. Besides that, your private lending practice can earn more in fees by doing five $50,000 loans than one $500,000 loan. You can charge more points on smaller loans, plus the fees. They close quicker and easier. Larger loans fail to close at a much higher rate than smaller loans.
Be laser-focused--Be specific in your advertising and marketing. Don’t say that you are “nationwide” and you fund “all loan types” and loan amounts. Advertise honestly and make sure borrowers recognize how honest you are with what loan types you offer and what areas you serve. In this like most all of life and business, honestly truly is the best policy.
Be transparent--On your website and in your communications make sure that you include your company name, your personal name, your physical address, personal pictures, and email addresses for all the world to see. Your authenticity and transparency will attract customers to you in a big way.
Don't be a broker, be a referrer--In your private lending practice, one secret to success is that you rarely broker loans to other brokers. Refer deals instead. If you have an applicant for a loan that is out of your area, expertise, or capacity, refer the prospective borrower to a reputable private loan originator. There is a very good reason for this. There is no way for every agent to get paid without over-charging the borrower. The universe will reward you if you selflessly refer to other brokers those leads which don’t fit your niche, and you will create goodwill and karma.
Always be learning--The best investments you can make are in yourself and your business. The books you read, the seminars you attend, and the videos you watch will help you to master the disciplines you need in order to succeed as a private lender. Attend industry conferences and seek out those who have achieved success and follow their advice. Find a mentor right from the start. Hire an industry professional to review your practices and help you achieve compliance with state and federal regulations.
By using these industry secrets of success for private lenders, you will have a steady stream of leads as you grow your local reputation and build your book of business. MoneyThumb wants you to be a successful private lender. We believe these tips will help you do so.
One last tip we'd like to offer private lenders is that you use PDF Insights. Savvy private lenders take advantage of the tools offered by PDF Insights to help them make much wiser and quicker lending decisions. To learn more about how PDF Insights can help your private lending practice, follow this link and request a free live demo.