What’s of utmost importance in private lending space?

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“That’s a big one, because at the end of the day everything is secured by the value of the property,” Barsoum said. “Secondly, for brokers – I know in the private space paperwork is lighter generally, and that’s a selling feature of private money.

“But the broker has to gather enough information from the borrower to gauge the risk of the deal so that when they’re presenting things to the lender, they’re presenting them with [enough information] so they can make an informed decision.”

That measured approach – ensuring risk is appropriately balanced between all parties involved in the transaction – is one that will prove a win-win for lender and borrower, Barsoum said, and help avert the prospect of a deal becoming embroiled in disaster.

“I’m not a big fan of calling the lender and saying, ‘Hey, I’ve got a great deal for you – you’re going to make 12%,’” she said. “That is not a good process. While it may be, in the broker’s opinion, a great deal, brokers should present facts to the lenders as to why they may think this was suitable for that lender, supported by the third-party appraisal report.

“So collect enough documents to validate value, to validate exit, to confirm who’s behind the deal beyond the property itself so that the lenders are protected, so that the borrower is getting decent pricing, and the broker at the end of the day is doing the right thing for both parties involved.”

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