I was talking to my Aunt a few months ago. I told her that I was working with a hard money lender. Unlike most people she didn’t give me a funny look but rather related to me a recent experience.

Her Story

They, like most people would be, were caught off guard. Alternative lending, the re-branded name for hard money loans, has been vilified over the years and in many circumstances rightfully so. The market like any market has its share of cheats.

My Aunt massaged their fears and arranged a meeting with a company specializing in bridge loans. The couple owned some commercial property and was willing to put it up as collateral. They met with the lending company and were able to get an agreement worked out. The banks estimated approval would take 2 months. So, they agreed on a bridge loan for a 3-month term. They walked away with their dream house at a steal. Within 2 months the couple got a normal loan with a normal rate and only payed a premium for a few months.

Lessons to be learned

Lesson 1: Connections matter

Who you know makes all the difference. If a loan broker or I had developed a professional relationship with my aunt, we would have won her clients business and helped them find an even a better deal. The cost of a good lunch is 30 bucks and commission on a good loan can exceed 40,000 dollars easily. Take realtors, and other reality experts to lunch that investment can be returned a hundred-fold with just one loan.

Lesson 2: People fear what they don’t know

Teach your customers, friends, and real estate professionals the benefits of bridge loans if only as a stop gap to traditional financing.Connections will win the day.  So many deals need fast funding and it can still be a bargain for the investor while using private money. Inform! Inform! Inform!

Lesson 3: Alternative Lending is only Going to get more Common

Alternative financing is in the early adopting phase. Now is the time to build your business. When surfing you want to get ready for the wave before it starts to crash down.

Those who adopt early brokers, investors and companies can ride the wave to great profits. Don’t let it leave you behind. Make sure everyone knows you are a loan broker because they will remember you were doing this before it was cool. The relationships of trust you develop are the best way to differentiate yourself from your future competitors.

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