If you want to be successful in private money lending practice then you will have to be careful about the set parameters as well as the lending policy that you follow. Whether it is ‘hard’ or ‘soft’ money lending business you are in, you will need to be very cautious in both the forms to make the most of the tremendous opportunities today that private money lending business provides. How To Establish A Successful Money Lending Business
The disciplines to follow:
There are a few strict disciplines to follow in order to grow and thrive in this tremendously competitive and highly prospective business of private lending brokerage. These are as follows:
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You will be most successful in the private lending business model if you strictly focus locally. Most of your loans provided ideally should be within a 100 miles radius of your office. Being local you will be an expert in knowing your market as well as the behaviour of the consumers in your community. You will understand the landscape of the local marketplace. How To Establish A Successful Money Lending Business
Remember that most successful and reputable private lenders are in reality investors first and then a money lender. Therefore, you should also consider your money lending business as second. Make sure that you invest only in what you know and where you know. Therefore, sort out the applications according to your business zoning and discard the ones that do not fall within your business periphery no matter how prospective a client you may have to sacrifice for this. How To Establish A Successful Money Lending Business
Find the sweet spot:
You will need to research a bit to find out the funding capacity and the limits that most of the private lenders in your region stick to. For example, if investors only make loan offers within say $50,000 to $250,000, then you too must market the same range as your niche.
You must be very honest with your referral network as much as you are to your sweet spot. It is best to build your book of business by starting out small initially to create enough business volume and then work your way upwards to give larger loans.
Do the math:
You will be able to earn a lot more in the form of interest and other fees for granting five $50,000 loans as compared to a single $500,000 loan. This is because you can charge more points on the smaller loans and add individual fees for each to it. Moreover, smaller loans will be offered for a short period of time meaning that these will close quicker and easier s compared to any larger loans that will usually close at a much higher rate.
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Be very specific regarding your advertising and marketing of your money lending business. You should be honest and transparent enough not to say that you operate “nationwide” and fund “all loan types and amount” when you do not. If you do so you will surely flourish as much as reliable and reputable lenders such as Liberty Lending US and others. Money lending business, after all, is all about trust between you and your borrowers and the other way round as well. How To Establish A Successful Money Lending Business
At all cost, you must strive for complete transparency. Make sure that you do not the post pictures of skyscrapers or people smiling in suits shaking hands but rely more on those pictures that will depict actual deals that you fund or have funded. Make sure that you include legitimate address and phone numbers, names of persons to contact and a well-functioning helpline number and of course valid email addresses. This will help the world to see and contact you as well when need be. Make sure that the phone numbers given are your direct phone numbers and also have the area code in it so that people can come to know where your business is located. Authenticity and transparency in marketing will drive more customers to your business in a big way.
Your primary idea is to originate loans and therefore stick to referring rather than brokering. That means when you receive a call from a prospective client outside of your area, capacity or expertise or capacity, make sure that you refer the caller to someone from your database of reliable private loan originators instead leaving the caller in the dark or putting down the phone curtly. Remember, brokering is a waste of your time and focus in most of the cases. How To Establish A Successful Money Lending Business
Lending the needy people money is a service and not a favour that you do to them. Therefore, do not put a client in the middle of a daisy chain. More often than not, these daisy chain deals will fail as the borrowers will not get well served. It is another reason you should stay away from brokering as there is no way in which you can pay every agent without over-charging the borrower. This will raise the cost of borrowing unnecessarily and there is a high chance that you will lose customers thick and fast.
Create goodwill by referring people to other money lenders if they do not fit in your business model. This will, in turn, result in referrals from those borrowers you referred as they will have more trust in you.
No matter how surprising it may sound to you, the best investment you can make is in yourself as well as your business. Therefore, focus on coaching, mentoring and consulting by experts to learn more about the money lending business if you want to succeed.
Just as in all other parts of life and fields of profession, success and leadership coaching goes hand in hand. Therefore, read more books about money lending, attend more seminars, and watch more videos to gain knowledge and to master the disciplines to follow in order to succeed in this business.
Make sure you mix with people who have achieved great success in the money lending business. Follow their advice. Hire an expert to review your practices and results from time to time and make sure that you achieve compliance with the state and federal regulations as well. How To Establish A Successful Money Lending Business