When you’re looking for a hard money lender it might be difficult to understand what to look for. Understanding the differences between two common lending models will give you the insight and information you need to make an educated decision when it’s time to choose your lender.
First, it’s important that you understand the primary business model your lender uses so you have awareness of how the lending process will go. Some hard money lenders are “Correspondent Lenders”. This often means they originate loans with the intent to sell them to a third party, allowing the lender to operate with a smaller capital base. While this model can be effective, during difficult economic times (like the pandemic), it’s possible that as a borrower or investor you’ll have a harder time securing the funds you need if the correspondent lender’s capital sources dry up (as many did in the pandemic). So while your lender may be highly experienced and successful, if capital sources are not lending that experience won’t matter. Plus, you could encounter some limitations like slower draw times on your renovation and construction loans.
Working with an in-house portfolio lender can mitigate many of these correspondent lender issues. Portfolio lenders have balance sheets that enable them to keep their originated loans in-house, reducing or eliminating dependence on third-party capital sources to buy their loans. They can use their balance sheets to continue lending even when third-party capital sources dry up. Wait times with in-house portfolio lenders are often shorter as there’s no need for secondary reviews by third-party capital sources slowing down the process. And you know when a portfolio lender says the loan is approved, it is approved as there is no second review by another institution. Time is money, right? In many instances, a portfolio lender can help you get your project started quickly and your construction draws faster.
The Builders Trust Capital Story
In August 2020, the Managing Partners of Ashmore Partners LLC, Peter Christiansen and Anthony Susco collaborated with a long-time lending industry veteran, Jeremiah O’Brien, to establish a new entity with a distinct approach to funding professional builders and developers.
The pandemic exposed weaknesses in the correspondent model. Good investors had difficulty procuring funding for quality projects due to a temporary shock that significantly curtailed capital availability. This was the genesis of Builders Trust Capital LLC. Peter, Anthony, and Jerry decided to start a portfolio lending company with a novel approach to private real estate lending.
Builders Trust Capital combines the speed and flexibility of hard money lending with responsible credit and construction risk management practices that enable the company to offer borrowers competitive rates and investors peace of mind.
Builders Trust Capital helps our customers build sustainable businesses capable of weathering market volatility and protecting their hard-earned assets. Our customers trust us to treat their businesses, their assets, and their money like they were our own as we offer advice and capital for their development projects.
Find out how Builders Trust Capital can help you.