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Private Lenders: Coalignment with your lender, Defined!


Video Transcript

Hi Tarek here from Royce Stone Capital, today we're talking about private lender co-alignment and what does that actually look like.

Well in my mind there are three types.

A Private Lender That Works With You

The first type of private lender is co-aligned with you they want you to win because they understand by you winning they win but more importantly they work with you when things are hard and we're going to talk about that later on.

The second type are neutral private lenders so they only do the bare minimum what's legally required and they'll enforce their legal rights.

and the third type are predatory private lenders which make up a very small percentage of what's out there in the market but like everything else there's good and bad.

Good Private Lending

Now what makes a good private lender that's co-aligned with you?

Well firstly they want you to win, they come from a business background, you're in a business, they want you to succeed and they understand your ambitions and goals.

You see we are funded through a number of family offices and high net worth investors and they all come from a business background so they understand the challenges of business and so when they work with our clients and they're part of that Royce Stone Family.

We all understand each other because we all want each other to win.

Now an important part of this is demonstrating to them what your goals and ambitions are and how you plan to get there. They can provide their advice and experience on challenges that they faced and how they overcame them. More importantly they can demonstrate to you the risks of what you're trying to do and the mitigation strategies for those risks!

When Things Go Wrong In Private Lending

Now another characteristic of a co-aligned private lender is that when you've done your best and for whatever reason something's gone wrong and you're unable to make an interest repayment or you're late they don't necessarily charge you the penalty rates because they understand it was out of your control and they want to work with you to succeed for the long term. So they may not necessarily charge you the full fees or the penalty rates all the time because they understand it was something that was out of your control.

Do You Have Enough Money?

Now another characteristic of a good private lender that's co-aligned with you is they ask you the very important question of do you have enough money for what you'retrying to get done? Because they understand that if you don't have enough money you can actually put everything at jeopardy and risk. So a good private lender that's coaligned will always ask you is this enough money for what you're trying to achieve? And if not, okay well let's work on a solution because we understand the risks involved now.

Another trait of a co-aligned private lender is someone that after doing a few deals with you, especially in the property game that they're happy to do a joint venture with you and they're happy to put equity into a project with you. Because it shows they trust you and that's something that you want to look for with a private lender. That as a function of time they're giving you better terms, because you're showing who you are and you're pro delivering on your promises. In return you want someone that's going to look after you.

That's a really important part of finance, is having good relationships.

That's it for today's video now on our website we've got a number of case studies there on how private lending can help solve difficult situations. Visit roystonecapital.com until next time take care and all the best

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