The hard money industry is constantly evolving, having seen a number of changes over the last few years alone. There is more opportunity than ever for originators as more lenders enter the scene, but each deal comes with its own challenges. This week we talk to Glen Weinberg, COO of Fairview Commercial Lending, for his advice on how to close a successful hard money deal.
Video transcript below:
Reporter: The hard money lending industry has seen plenty of changes in the last 5 years and as the capital markets loosen up, there are more changes to come. With new and inexperienced players entering the market, Glen Weinberg, COO of Fairview Commercial Lending cautions mortgage originators to be careful with the lenders they do business with, beginning by doing their research on the borrower and the hard money lender.
Glen Weinberg, COO, Fairview Commercial Lending
Glen Weinberg: Understand the deal, be able to easily explain and answer simple questions, make sure you understand the general property. I mean, is this an icecream stand or is this a gold mine.
Reporter: In such an unique industry it’s also important to understand property types, what each lender does and that each has their own niche.
Glen Weinberg: The property type, when you are looking at a lender, certain lenders specialise in certain transaction types. Just make sure you understand what each lender does, because it is a unique industry.
Reporter: Weinberg says one mistake mortgage originators make, is focusing on deals that don’t fit lender limitations and aren’t going to close.
Glen Weinberg: Every lender have seen them all. For example, there is a guy who is trying to get a $100 million ranch closed. I have seen the deal 50 times, still hasn’t closed and probably will never close. Focus on those deals that will close, that fit the lender’s parameters.
Reporter: Compensation can vary based on transaction types and a number of factors, Weinberg says. But if you’ve done your homework, these unique transactions will be worth your time.
Glen Weinberg: Typically hard money transactions are very profitable to brokers and the reason is, these transactions are not run of the mill transactions. For example, a borrower can’t shop to a 100 people for an SBA Type 1, I mean these are all unique transactions, they have all got a twist and they are all going to take effort in order to get closed. And as a result, brokers are compensated very well, typically for private lending transactions or hard money transactions.
Reporter: Weinberg encourages mortgage originators to associate with the right lenders to make sure you are not wasting your time and understand who the real lender is to best protect your client and yourself.
Glen Weinberg: As a broker you’ve really got to understand who the real lender is, in order to protect the client. Make sure you associate with lenders like that, so that you can get more transactions closed and you aren’t wasting your time on deals that will never close.