In real estate, hard money lending can be an excellent way to build an established business that brings in money consistently.
As a plus, offering hard money for real estate investors requires relatively low capital outlay – not including, of course, your loan money. However, as seasoned hard many lenders know, these types of businesses are much more effective when they operate at peak efficiency.
Hard money lending is one of those many aspects of the real estate world where time and money factor into the equation of success.
Some hard money lenders come into the community ‘gung ho’ and get mired in low productivity simply because they can't strategize to fine-tune a deal-making process or a consistent relationship with investors. Others approach the business with what auditors call professional skepticism – they know that there are potential gains, as well as risks and challenges. By anticipating those challenges, they have a greater chance of sharing in those gains.
With that in mind, there are some time-intensive processes that hard money lenders can streamline significantly to boost their business, maintain work/life balance, and avoid many pitfalls related to a stressful and inefficient lending business.
Real estate database software and investor insights can help you accomplish 4 critical, top-priority time-savers:
#1 Monitoring Peer-to-Peer Networks
One of the most fundamental and essential parts of hard money lending is finding investors to work with, and finding deals that you can sign off on.
A traditional way of doing this involves established peer-to-peer lending networks. Through a third-party website and other resources, the hard money lender inspects each opportunity and communicates accordingly.
However, as you'll see later on, fintech offers you the ability to automate a lot of this process and spend less time navigating peer-to-peer networks. When you base your deal acquisition on investor activity and cutting-edge real estate data insight platforms, you can find and analyze potential deals much more quickly and with a lot less effort.
#2 Getting Deal Data in Place
Suppose you have an established list of investors. You still need to review each individual deal on its own – and the more scrutiny each opportunity receives, the more solid your business becomes.
Sometimes, the problem is format – how do you receive information on individual investor deals? If you receive them from many different sources, you have to aggregate all of those pieces of information, and format them so that you can provide a consistent review.
Sure, a few comps will get you started - but what if you received a real snapshot of comprehensive investor activity in the area, along with before and after figures and photos of what those investors are having success with? Would that information help to determine a property’s investment potential?
Of course it would. This information can now be presented at the click of a button.
Having a comprehensive solution in place means single-click research on current lending opportunities. That cuts your research time in half – at least!
#3 Deal Criteria and Rubrics
Along with having good individual deal data, you also need core strategic data.
When you've done hard money lending in the past, you know exactly how ineffective it is to ‘go with your gut’ and ‘wing it’ when you're looking at property profiles.
You might be the most intuitive person in the world, but you need concrete data and concrete criteria to make your decisions. Otherwise, it's easy for a hard money lender to agonize over every individual deal – even if you're not one of those people that family members describe as indecisive or ‘a little bit OCD.’
How much money will you allow to go into a property deal, and what is that based on? Sure, it's based on property valuation potential – but that's not good enough.
Having the right consistent criteria can make your lending decisions as easy as a snap of the fingers and free up valuable time for you to fine-tune your business in other ways. When you want to optimize your process of offering hard money for real estate investors, a data-driven approach is key.
#4 Business Reputation
Speaking of freeing up time for your business, these important competitive advantages can also make your status as a hard money lender more attractive to a greater range of investors.
Investors who are aggressively looking for hard money to back their deals often get a sense for which lenders are on top of things and ready to go at a moment’s notice. That's not saying that you don't do a full review of a deal, or completely work through a process before moving ahead – it just means that you're competitively advantaged to communicate efficiently.
Here's how Privy can help hard money lenders to do all of these important things much more effectively:
- Our platform is based on current investor activity, and it allows you to see at a glance what's happening in a local neighborhood.
- Individual property profiles are easy to send and receive, so that you can keep in better touch with investors.
- Privy also offers unique ‘done for you’ marketing and co-branding opportunities to hard money lenders.
Your Next Steps
With solid investment and activity data and real comps, hard money lenders can evaluate promising deals. With communication tools, they can keep in better contact with investors. All of this can help to super-charge your hard money lending strategy and put you on the fast track to success.
Start by exploring Privy now as an option for your real estate database software, or download our free comparison guide to evaluating the right REI tool for you: