Within the real estate industry, hard money lending has an established pedigree of success and credibility. But, and this point bears repeating for any professional who works with residential or commercial (or both) brokers: not all hard money lenders are the same, not every business has a reputation based on verifiable achievement and the unsolicited testimony of satisfied clients; not every hard money lender, to state the case simply, is the same. And therein lies a series of profound differences involving values, service, experience, decision-making and leadership. These principles are essential in any economy, but they have added importance during a period of significant change and upheaval. All of which is to say, real estate brokers and agents - and their clients and referrals - should perform the necessary due diligence concerning hard money lenders.
I offer these words based on my own work in the industry, since hard money lending is often a critical resource for residential homes, investment properties and multifamily apartment complexes. So, as a matter of course, I appreciate the needs of real estate professionals; and thus, I recognize that people should take the time to review an institution's position in the marketplace and its respect by the public as a whole. This rule should govern all real estate and financial transactions, influenced by a philosophy of five core values.
First, speed is an essential factor in closings for both real estate owners and investors. A firm should typically respond within the same day to all loan inquiries, allowing deals to close in weeks, not months. That point underscores the larger theme about service, that the right firm - with the right resources - should work with real estate professionals to achieve results in a timely fashion.
Second, flexibility should be a cornerstone of the way a hard money lender structures loans. Remember: the point is to empower a borrower to achieve his or her goals. In turn, there should be no rigid rules on debt service coverage, vacancy rates, property types and other obstacles that prevent the execution of needed loans. Knowing this information depends on having done the necessary research - the aforementioned due diligence - to succeed.
Third, fair pricing is a necessity. That advantage is a boon to nearly everyone in the real estate industry, influencing results and accelerating the economic recovery we all want to achieve. But that success requires a personal investment in professional integrity. In other words, find the firm with a real stake in helping people -- and you will increase your ability to prosper.
Fourth, there should be minimal red tape. This maxim - that bureaucracy is the enemy of swiftness and success - is a truism for every industry. Nowhere is that fact more relevant or timely than in the real estate industry. Efficiency is a symbol of leadership, a reminder that a firm has the ability - and the desire - to act boldly and intelligently.
And finally, a firm should always provide an initial written term sheet, which outlines all important factors. There should be no hidden surprises or sudden changes once a client commits to a plan of action. Professionalism is essential because, and here again I emphasize the value of transparency, borrowers deserve to work with only the finest professionals.
These five principles are model for all business to follow. They underscore the value of integrity and the importance of wisdom. With these benefits at our disposal, we can strengthen the real estate industry and the broader economy as well. Now is the time to fulfill that mission.