yourself at every step of the process. We like to have our clients put money down at the closing of the loan. This will be your insurance policy if something goes south. Money upfront will incentiv- ize clients to work through issues rather than walk away from the table. Inquire about your borrowers’ plans. How are they going to invest their loan? Do they understand the zoning and home development regulations for the proper- ty? Credit reports only reveal part of the picture. We look at our clients’ previous sales, cash reserves and experience in the field to decide if our borrowers know what they are doing. Bank statements, tax documents, signed financial state- ments—this data will protect you from fraudulent borrowers. Of course, an attorney is crucial. FOSTER YOUR REPUTATION Keep in mind that money lending is a financial risk shared by both parties. Just as you’re watching your borrower, your borrower is keeping tabs on you. Your reputation is everything in this business. To this end, maintain an open, amicable relationship with your clients throughout the process. Be on hand to answer any and all questions the client might have. Lay out your process early.
years: Don’t be afraid to say no. A little discretion will save you a lot of trouble. Awareness of your business’ limitations, your client’s goals and the market in which you work is an absolute necessity. If you can remember this and pair it with the tips above, you’ll be ready to tap into the increasingly lucrative fix- and-flip market. •
Tell your client how your systems work and why you’ve come to rely on them. Honest, clear communication will take you far in this field. While the simplest Q&A session with a nervous borrower might seem mundane, treat each interaction like an investment into your brand, because that is precisely what it is. The smooth- er the deal goes, the more likely your client is to spread your name through the grapevine, reaping dividends far beyond anything immediately tangible. Clear, open dialogue serves to protect your image as well. The last thing you’ll want is a deal to fall apart due to a sim- ple miscommunication. Even if you had no direct influence on a catastrophic falling out, there’s a chance the clients will misattribute their poor fortune to your hand, sullying your name in the eyes of potential leads. BE REALISTIC There’s little doubt that creative fund- ing solutions through private lending can yield profitable returns for bro- kers. If you choose to follow the advice above, the chances of getting your own private lending firm off the ground in- crease immensely. My final piece of ad- vice is something I’ve learned over the
Jeffrey Tesch is Managing Director of RCN Capital LLC, a national, direct private lender. He is responsible for the day-to-day operations of RCN,
including sales growth initiatives, underwrit- ing review with compliance oversight and leadership of senior level strategic planning. He joined the company in 2010, and has led efforts to develop a national brand in private lending with the best practices and trans- parent products for a diverse customer base. Since RCN’s inception, Tesch has personally underwritten more than 1,635 loans and overseen originations totaling more than $335 million. His previous real estate experi- ence was as an investor in both commercial and residential properties, ranging from single-family homes to commercial retail centers. Tesch currently serves as a member of the American Association of Private Lend- ers’ (AAPL) Ethics Advisory Committee.
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