As a seasoned leader in the private loan (hard money loan) industry, I’ve truly enjoyed seeing the trajectory RBI Private Lending has taken since the company was founded in 2015. And it’s been especially gratifying to support dynamic real estate investors with bridge loans, construction loans, and fix and flip loans. The cornerstones of our growth are bridge and construction loans as they make real estate investing possible. We’re committed to this sector, and I’m eager to share some invaluable insights that can help investors secure speedy loan approvals.
Specifically, in this blog, I’ll provide an overview of the world of private lending, offer tips to help accelerate the hard money loan application process, dive deep into the advantages of working with a private money lender versus a traditional lender, present perspectives from some of my colleagues who have first-hand experience with clients who have benefitted from swift loan approvals, and discuss why RBI’s holistic approach to private lending can work in your favor.
A Peak into the World of Private Lending
Private lending is defined by one main characteristic: an individual or a private organization provides the money for the loan. When the private lender is an organization like RBI, it is not a licensed lending organization like a bank. This means the rules and regulations that apply to banks and other lenders do not apply to private lenders. However, the business is not completely without regulation. Certain state laws restrict the amount of interest private lenders can charge and the number of loans they can make.
Hard money loans from private lenders often come with higher interest rates than those offered by licensed lenders and the loan payments are often interest-only, with one big balloon payment at the end of the term. Our hard money loans specifically serve real estate investors and aid them in purchasing investment property.
The qualification process for a private loan is quite different than for a traditional mortgage loan. Private lenders are less concerned with the credit history and credit score of the applicant and more concerned about the financial sense of the deal itself. For example, in the case of a fix and flip loan, a private lender would be more focused on the location, the type and extent of the required remodeling, and the time to completion.
That said, private money loans typically have shorter terms, sometimes only six months to a year, but other terms can be payable for up to several years. The loan itself is secured by the property and a down payment is usually required. And most private lenders require a documented plan that outlines exactly how the proceeds of the loan will be spent.
My experience and unique insights as the Chief Commercial Officer of RBI, where I’m responsible for the firm’s overall growth and management, tell me that our future is bright as a reliable and sustainable source of funding for real estate investments. The reason for our ongoing success is partly because everyone at RBI has a hands-on role in establishing and cultivating customer relationships and contributing to our seamless lending process. We also employ a highly personalized and flexible approach to private lending, enabling us to pivot when necessary to make deals happen quickly.
Accelerating Your Loan Application: Insider Tips
In my experience, real estate investors seeking hard money loans want access to funding fast and are most successful when they present a compelling case to lenders, showcasing their project’s potential for success. At RBI, we look for specific items that indicate whether a real estate project is well conceived or poorly planned:
- Accurate and up-to-date financial information, including bank and investment account statements
- Detailed project plan that includes timelines, budgets, and milestones
- A clear and concise exit strategy should something unexpected happen
- An on-target assessment of the project’s value (A realistic valuation not only aids in determining loan eligibility but also demonstrates your prudence and understanding of market dynamics.)
- A strong team of experienced professionals in your corner with expertise in the real estate market to help build confidence that the job will be completed and done in a mutually respectful and timely manner
I also want to stress the importance of transparent communication throughout the loan process. Communication is a two-way street, and responsiveness on the part of the investor and the lender during the application stage is critical to ensuring a smooth and swift loan approval experience.
The Advantages of Private Lending: A Closer Look
Now I want to delve deep into the benefits of choosing private lenders over traditional financial institutions regarding real estate investments. Purchasing investment properties, whether they be rental property investments, commercial property, or single-family homes, require an understanding of the real estate market by both your lender and you as the buyer. Unlike conventional lenders, RBI Private Lending focuses exclusively on serving real estate investors.
First, hard money loans are more flexible than traditional financing. The guidelines to qualify are fewer and not nearly as strict as they are for traditional loans. Plus, hard money lenders are more likely to fund the purchase of distressed properties in need of substantial repair (fix and flip loans) – thereby enabling real estate investors who are short of cash to buy low-cost properties and renovate them, increasing their value. We understand the real estate market and are more than just your lender – we are truly your partner.
This flexibility can also be seen in the terms that are offered and the loan customization capabilities that private money lenders have. Hard money lending allows us to offer loan programs designed to help real property investors succeed.
Private money lending is also faster than traditional lending. Investors can access the money they need in a matter of days, as opposed to waiting weeks for funding via a conventional mortgage.
Additionally, private money lenders like RBI support a variety of real estate projects (residential, commercial, single family, multi-unit, etc.) and offer a diverse scope of loan types to accommodate them: fix and flip, new construction, bridge loans, rental loans, lands loans, and commercial.
I can also state with confidence that our personalized service, fast decision-making process, and tailored solutions distinguish private lenders from more conventional lending alternatives.
More Than Just Loans: Our Holistic Approach
When seeking funding for your real estate investment, be sure to evaluate lenders on other factors beyond their rates and terms. I understand that they are important, but a private lender offers additional support and services in addition to the loans themselves. At RBI, we view our client relationships as much more than transactional. Rather, we take a more comprehensive approach, one that nurtures those relationships to ensure greater satisfaction.
- Tailored guidance – We know the loan process can sometimes be confusing – even stressful. That’s why we offer our clients personalized advice and assistance from completing the application through closing.
- Financial expertise – RBI won’t leave you on your own to make important financial decisions. We’ll ensure you are properly informed and well educated so you can make the right choices for your individual situation.
- Networking opportunities –We’re well connected in the region and can introduce you to other qualified professionals that can help make your real estate project a reality.
- Market insights –We’ll regularly share developments that are impacting the real estate industry to help you navigate trends that might affect your investment.
- Transparency – Being open and honest is key to having a positive experience. At RBI, we know this – that’s why we proactively communicate with our clients throughout the loan process.
- Seminars, workshops,and webinars – RBI uses a variety of educational tools and events to educate our clients about the real estate investment industry, what RBI brings to the table, how certain lending products work, how to navigate the process, etc.
Over the years, I’ve personally seen how this holistic approach to private lending enhances our clients’ experiences, contributes to the success of our borrowers’ projects, and causes our real estate investment clients to return to RBI time and again whenever they have funding needs.
I know there are other private lenders that you can consider. But I truly believe that RBI is one that stands out from the rest.
- Fast closing – Approvals are issued within 24-48 hours, and the average closing takes place within 7-12 days.
- No prepayment penalty – There are no penalties for paying off or partially amortizing the debt at any time.
- Low rates, low payments – We offer competitive rates and flexible programs with interest-only payments until maturity. RBI’s hard money loan rates are consistently among the best in your market area.
- Everyone is welcome – We serve borrowers with no credit history, new businesses, and foreign nationals.
I hope this blog has provided valuable information about private lending in terms of insider tips, strategies, and the many ways you benefit from working with a private lending company like RBI. I want to personally encourage you to leverage the insights I’ve shared to expedite your Bridge, Fix & Flip or Construction Loan application process. Please don’t hesitate to contact our team for personalized assistance and guidance to get your real estate project off the ground and progress to completion.
Andrés Saias is Chief Commercial Officer and Member of the Board for RBI Private Lending. His experience includes working in banking at 100% Banco in Venezuela. Andres leads the group’s commercial initiatives with borrowers, brokers, investors, and secondary markets.He earneda degree in economics and business administration with a concentration in finance from Boston University and a master’s in real estate from Georgetown University.