5 Ways To Improve Your Hard Money Lender Pitch
By Paul Esajian on September 29, 2016
Regardless of the market you are in or how you invest you will eventually have a need for a hard money lender. If you start your search when an opportunity comes your way it may be too late to secure the deal. Hard money lenders are similar to banks in that they have certain guidelines and criteria that must be met. These guidelines are usually much more lax but they are still in place. When trying to secure hard money funding it is important to showcase yourself and your knowledge of the business. You may only get a few minutes to pitch your investor and put your best foot forward. Here are five ways to improve your hard money lender pitch.
- Develop An Elevator Pitch. When meeting with a hard money lender you may only have a few minutes to present yourself and your business ideas. Even if you are at lunch or in a relaxed environment you still need to develop a short pitch. In many circles this is known as an elevator pitch. Instead of going into full detail of everything you want to do you need to condense your ideas into a brief summary. This summary needs to be concise enough to get your point across while not becoming too boring and time consuming. There are some people who have the ability to think on the fly and easily present their information. Most people need to write down a few key points and practice their presentation at least a few times. You need to strike a balance between sounding scripted and sounding prepared. Before you meet with your investor you need to spend some time developing a few key thoughts you want to get across.
- Light On The Details. You don’t need to tell your investor everything you have ever done in the real estate world or every thought you have. Doing this is one of the easiest ways to lose your audience. Good hard money lenders can find out everything you have done if they really want to. It is not that difficult to search your holdings either in your name or your LLC. By telling them all your accomplishments you may think you are touting yourself but you may be doing too much. When making your pitch start by the sharing your short and long term vision. By vision you need to show specifically what you intend to do with any funds and how long you will hold them for. You don’t need to get into the who, what, where and why. Have this information ready but only provide it if asked. You want to sound prepared but not too over the top. In making your pitch you need to provide an overview without giving too many details. If you come right out with numbers, scenarios and options you may quickly lose your audience.
- Research Your Investor. The hard money lending business has changed dramatically over the past decade. In the past there were maybe one or two lenders in any given market. They lent solely on unique situations such as stop foreclosure. Today there are many more options and much more public. These companies have websites and business cards and are easily accessible. Prior to meeting a potential lender you need to do some due diligence on them. Go to their website and find out as much information as you can about them. Discover which areas they focus on and some of their lending guidelines. If you obtained their information from a colleague reach out to them and see if they can provide you any insight on how they operate. The more you know about who you are talking to the easier it is to structure your pitch.
- Be Ready To Answer Questions. After you provide your initial pitch you need to be ready to answer questions. Hard money lenders make their decisions based primarily on the numbers with a small consideration to your personality. You can be the most likable person they have ever met but if the numbers don’t make sense it won’t make a difference. If you have a specific property and deal in mind you need to arm yourself with every calculation possible. You need to know the return on investment, cash on cash return, projected carrying costs and potential timeframe. Instead of focusing solely on the big picture bottom line you need to know how these numbers got there. Take the time to know and understand as many different formulas and scenarios as possible. You should also be on your toes for some rebuttals. A good lender will throw a handful of “what if’s” at you and test your knowledge about the process. The more you know the more likely they will agree to work with you.
- Show Your Personality. The numbers are obviously the backbone of any deal. However in many cases the lender wants to feel comfortable with who they are giving access to funds. One way to do this is by letting your personality come across. The real estate investor world is business but not everything needs to be so serious all the time. Before you start your pitch ask questions and build a relationship. If asked tell a little bit about yourself, your family and even your interests. Keep your answers short and sweet but don’t be afraid to let your personality come out. If you have a sense of humor let it show. This will often be what is remembered more than any numbers or formulas.
Access to hard money gives you the ability to act quickly whenever a new opportunity comes your way. Getting that access often means improving your hard money lender pitch.