Mistakes on Dealing with Private Moneylenders

For those who need immediate funds, a private money lender in Singapore is one of the many options you’d better choose from, when applying for a loan. But, not all lenders meet the minimum required guidelines for lending, and many are not licensed to provide loans to individuals in seek of funds. Before you apply, make sure you run online searches, so you can find out about the prospective lenders, and learn about the different lending terms offered, in order to ensure you select the right private money lender

Singapore for your money.

Following are some mistakes that people will always make when dealing with private money lender.

Not getting pre-qualifiedSometimes, it really confused me when someone signs a contract without prior consultation and pre-approval from a funding source. People often put the cart before the horse. Before you start making offers on houses, consult with your private money lender and get pre-qualified.Even get yourself a proof of funds letter so that you’re a "bona fide" cash buyer. Do you know how much better your offer looks when you can tell the seller that you’re an all cash buyer and can back it up with a loan commitment from the lender? The difference is night and day, and your offer moves to the front of the line regardless of whether it was the highest offer or not. The best deals come from sellers who have to move fast for one reason or another and want to close now!

Worrying about the interest rateWhen you first hear the interest rates that private money lenders charge for their services, thought of the mob and loan sharks are conjured up. How do they get away with charging such high rates? The fact is that the rates are not really that high, considering the risk they take and the terms of the loan. An average investor loan takes just under 180 days to complete and sell. This is temporary parking at best. Lenders provide you with the bulk of the capital to make your investment deal work, and some very good insight based on their experience. This is the cost of doing business and a small one at that, and it is fully tax deductible against capital gains.

Look at it this way: It is access to easy high-leverage, low-effort capital to fund your projects. It allows you to do the most important part of your job, which is to find more below-market houses. How many offers could or would you make if you never had to worry about your funding source?

Not building a solid relationship with your local private money lenderSetting up and establishing a solid relationship with your private lender is vital. Choose one who knows the area and who can close quickly. I cannot stress this enough. This is a relationship business where all interests must be aligned. A good local lender is paramount to your success. Some of the larger national companies that lend from a distance take far too much time to efficiently process a loan request. They are too unfamiliar with the local variances in each neighborhood to be effective, often leading to delays and no funding in the end. Getting good deals in real estate is a fast action business and requires local boots on the ground. Plain and simple. While you still may need an appraisal for the file, most local private money lenders can just drive by a house and tell you yes or no upfront. That information and evaluation is invaluable in many ways. Long distance lenders (and you by extension) can be fooled by bad comps. Wouldn’t you rather have a local

expert, willing to put their own money up, tell you if your deal looks viable or not?

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