Visualize this moment: She said, “Yes!” Or maybe He said, “Yes!”
You may have envisioned the big “yes” moment on bended knee, but I gotta say that a “yes” moment in the private money game comes in at a close second for real estate investors.
So your lender is all in. Congrats! After all, you must have done a kick-butt job presenting to them, maybe with some helpful tips you got from my lesson on how to present a deal to a private lender where we talked about presenting the deal to your private lenders and only giving them the info they really need.
So, now you got that ‘Yes,’ you’re relieved, elated and probably panicking big time thinking, ‘Now what the heck do I do? The deal is funded, so what are my next steps?’
First step? Breath. You’ve got this.
Now let’s talk about your next move. Your lender’s made the commitment to fund your loan and that’s amazing. Now it’s time to get down to business. The first thing you need to do is ensure your loan gets funded accurately and on time, and that means defining the specifics of the deal.
In my last private money training post, we learned what lenders really need and when to give them what they want. Today, it’s all about defining the details you need to actually get the money to fund your real estate deal.
4 Critical Steps For Private Lender To Fund Your Deal
Nobody likes a Late Loan
When it comes to making sure your loan is on time, you’ve got options. Late is never great, and there are 4 main steps you can take to avoid the dreaded waiting game. Make sure you have your Closing information from your Title Company. Information like official name of title company, closing date, location, routing number for funding and any special protocols or paperwork they require for alternative funding/financing.
After you have that information you will need to work with your Private Lender and obtain the following information from them:
1) Ask Where the Funds Currently Reside
Urgency is the key here. If your lender is investing from an IRA or liquidating an asset, make sure the time frame required to access those funds synchs up with your closing time. Find out – immediately – were your funds live after the lender commits to the loan so you can keep the ball rolling forward.
It’s all about securing the funds on time.
Keep in mind that some IRAs require approval from an administrator, and sometimes this can take up to a week… not exactly what we call immediate. But it’s a necessary evil. So, as soon as your lender commits, find out where those funds originate.
If they’re liquid, fantastic! Consider yourself lucky.
But if they’re tied up in an IRA, be patient and be sure to explain the (somewhat lengthy) process to your lender, so your funds can be released as quickly as possible.
2) Ask How They Would Like to Deliver the Funds to Closing
They’ve got 2 options here…
The lender can either:
(A) Wire the funds to the attorney and title company, or
(B) They can send a certified check to the specified attorney and Title Company.
Your lender has 2 options, that’s it. Plain and simple.
But here's a quick tip – make sure your lender does NOT write the funds over to YOU or your company directly. (Talk about opening a can of worms!)
Having your lender write the check directly to the Title Company or specified attorney keeps the process clean and simple. You’ll find too that most private lenders feel more comfortable with this process anyway, so make it a best practice. Everyone will be happy in the end.
3) Ask your New Private Money Investor What Name(s) to Attach to the Investment
Find out what name your lender wants to use on all documents involved in the loan. This one may seem insignificant, but it’s an important detail because it will determine how your investor will be taxed. Be sure to include:
- Personal Name
- Business Name
- Other Entity
4) Ask for Tax Information
This one is cut and dry. If your lender is using a personal name, use his or her social security number. If we’re talking business names or other entities, apply the tax identification number.
Know The Private Lending Process For Funding Deals
Getting comfortable with what to do after your lender says “Yes” is a process just like anything else… the more you do it, the easier it will get. Just remember to get the details and keep the process moving so you can secure the loan on time and avoid hiccups whenever possible.
That’s all, folks. Thanks for hanging with me! If you have not already, check out my quick training video on "What to Say to Attract Private Money"...just click the link below.