Realty411 Magazine The Future of Real Estate is Here | Page 60

6 Tips for a Successful
Private Lending Practice
By Mark Hanf,
CEO of Pacific Private Money
five $50,000
loans than
one $500,000
loan or even
a $1 million
loan! You can
charge more
points on
smaller loans,
plus the fees. They close quicker and easier.
Larger loans fail to close at a much higher
rate than smaller loans.
Tremendous opportunities exist
today for private money loan
brokers. We found the following
disciplines helped tremendously
in growing a thriving private
lending brokerage.
Stay local.
The private lending business model is
most successful when you focus locally.
Most of your loans should be within 100
miles of your office. Most of your private
lenders will be local to your community.
You will succeed in funding loans because
you are a local expert and you understand
your local marketplace. Remember that
a reputable private lender is really in the
investment business first, and the lending
business second. Invest in what you know
and where you know. For example, we are
Northern California-based, and we don’t
spend time on most Southern California
loan applications.
Find your sweet spot.
If the funding capacity of the majority
of your investors ranges from $50,000
to $250,000 then market this range as
your niche. Be honest with your referral
network as to your
sweet spot. Besides, a
guy that needs a $50K
loan will not be well
served by a broker
who regularly funds
million dollar loans.
Build your book of
business by starting
out small, creating
volume, then working
your way up to larger
loans. You can earn
more in fees by doing
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Focus.
Be specific in your advertising and market-
ing. Don’t say that you are “nationwide”
and you fund “all loan types” and loan
amounts. I guarantee you that brokers
who market themselves as such do not
have a thriving business.
Strive for total
transparency.
If you check out our website you will
notice that we don’t have pictures of sky-
scrapers or smiling people in suits shaking
hands. We have pictures of actual deals
we have funded. We have our names,
addresses, pictures and email addresses
for all the world to see. We use our direct
phone number with area code so people
know our business is located in the San
Francisco Bay Area. Google us and you
will find our detailed LinkedIn profiles.
We’ve never pretended to
be something we weren’t.
Your authenticity and
transparency will attract
customers to you in a big
way.
Refer,
don’t broker.
We originate loans. We
rarely broker loans to other
brokers. But we refer deals

PAGE 60 • 2014

almost every day. When a call comes in for
a loan that’s outside of our area, expertise
or capacity, we will refer that caller to one
or more brokers from our database of rep-
utable private loan originators. Brokering,
in most cases, is a waste of your focus and
time. Especially if the lead is coming from
another broker. You do not want to be in
the middle of a daisy chain. Daisy chain
deals mostly fail because the borrower
does not get well served. The reason they
fail is that there is no way for every agent
to get paid without over-charging the bor-
rower. The universe will reward you if you
selflessly refer to other brokers those leads
which don’t fit your niche. Because of the
literally hundreds of leads we have referred
to other lenders over the past several
years, the goodwill it created has resulted
in referrals coming back to us daily from
people to whom we selflessly referred
business months or even years ago.
Coaching, Mentoring
& Consulting.
The best investments you can make are in
yourself and your business. Success and
leadership coaching are an important part
of my life. The books you read, the semi-
nars you attend, and the videos you watch
will help you to master the disciplines
you need in order to succeed in a world
full of distractions and naysayers. Attend
industry conferences and seek out those
who have achieved success in this business
and follow their advice. Hire an industry
professional to review your practices and
help you achieve compliance with state
and federal regulations. Conduct this
business properly, and soon you will have
a steady stream of new leads as you grow
your local reputation for performance and
thoroughness.
For more information about Mark Hanf,
please visit: www.pacificprivatemoney.com

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