Requirements of Private Money Lenders
A private money lender won’t even look at your loan request unless you first have an Executive Summary.
What is an executive summary? Well you can start with Wikipedia and that will give you a variety of formats for an executive summary. However for the specific purpose of requesting a hard money loan, your executive summary must container certain elements.
An executive summary doesn’t need to be a novel; in fact, it can be a paragraph as long as it contains all of the necessary elements. First, you must start with the loan amount requested and the reason for the request. Then you want to give the timeline of the project or property which includes how much cash you’ve put into the property, when it was acquired and for how much, etc, etc, up to the present date.
An example of a timeline goes something like this:
“In 2003 I purchased this ten acre property in Summit County, Utah for $10,000 cash. The property is zoned as residential. In 2004, after obtaining a building permit, I built a 1,500 square foot home for$23,000 cash. In 2009, I plan on expanding the home by another 1,000 square feet and will require a loan of $19,000.00″
This timeline example would provide your hard money lender a snapshot of your loan scenario which will enable them to make a quick decision.
Beside the timeline, your executive summary must also include your exit strategy, which is a topic all its own. Our exit strategy, if well thought out, can be 1 or 2 sentences.