The Broker’s Guide to Private Money Lending: Best Practices & Tips

The market moves fast, but lenders don’t always keep up. Deals get stuck on "just one more document," underwriters disappear for days, or approvals land too late to be useful. With mortgage applications down 6.2% so far this year and 30-year fixed rates hovering near 6.72%, your customers can't afford a delay, and neither can you. That's why more brokers are turning to private real estate loans to find the speed, flexibility, and certainty that traditional banks simply can't provide.

In a market where private lending exceeds $2 trillion annually and DSCR loans account for 12% of all residential real estate loans (up from 8% last year), selecting the right partner is about dependability.

This guide is built for residential and commercial mortgage brokers, small private lenders, and referral partners who want to start offering private money loans without any unnecessary frustration. You'll discover where deals go wrong, how to market them for a quick "yes," and why RCN Capital's broker-first model keeps you in the driver's seat.

Understanding the Modern Private Money Lending Process

The private money lending model differs significantly from bank models, providing brokers with unique benefits when dealing with real estate investors. In contrast to traditional lenders who concentrate largely on the credit quality of borrowers, private money lenders emphasize property value and investment potential.

Speed as a Competitive Advantage

RCN Capital provides pre-approval in 24 hours on full applications — which is imperative when customers are competing in markets where properties attract multiple offers. Banks and other conventional lenders take 30–60 days for approval, which results in lost opportunities. In contrast, RCN Capital provides an 89% on-time closing rate, assuring brokers can provide funding without compromising their reputation.

Best Practices in Private Money Lending for Brokers

Utilize proven techniques to differentiate yourself as a broker who offers private real estate loans. The following are some of best methods for closing private money loan deals.

Documentation Organization Systems

Organized brokers consistently outperform in closing rates and cycle times:

• Keep client financial statements, property documentation, valuations, and project estimates ready.
• Provide market analysis and comparable sales data.

Pre-Qualification Strategies

Effective pre-qualification saves time and improves closing rates:

• Assess borrower experience with similar projects
• Verify down payment and reserve funds early
• Review property acquisition strategies and target markets
• Confirm realistic project timelines and budgets
• Evaluate exit strategy feasibility

Ongoing Communication Protocols

• Weekly status updates to borrowers during underwriting
• Proactive communication about condition clearances
• Coordination with title companies and attorneys for closing preparation

Relationship Building with Underwriters

Good relationships with RCN Capital's underwriting staff expedite deal approvals and enhance success rates. This includes:

• Understanding specific underwriter preferences and concerns
• Providing complete, accurate information on initial submissions
• Responding promptly to condition requests and clarifications
• Maintaining professional communication throughout the process

The practical checklist: what to collect before submission

Submitting a nearly flawless file upfront expedites decisions and defends your commission. For the majority of private real estate loans, you will be collecting these items:

• Executed purchase agreement or site control evidence.
• One-page sponsor profile: experience, recent exits, typical budgets.
• Bank statements proving reserves or escrow for contingency.
• Detailed rehab or construction budget with line-item contractor bids.
• Comps supporting ARV (for flips) or a feasibility memo (for new builds).
• Contractor license, GC contract, insurance proof when applicable.
• Capital stack: equity sources, subordinate debt docs, commitment letters.
• Clear exit plan with timing and refinance/sale assumptions.

Utilize a checklist for each program to prevent any omissions. When underwriters are not required to pursue fundamentals, turn times diminish, and your pricing leverage increases.

Pricing, fee disclosure, and protecting commission

Brokers lose commissions too frequently because of unmet expectations that were not nailed down before closing. Safeguard your fee with clear guidelines:

• Put broker compensation on the term sheet and the commitment letter. Require that language.
• Confirm HUD disclosure at the term stage so that settlement matches the commitment.
• Use written referral or fee agreements when the structure is nonstandard (performance, staged payments).

Documented fees minimize disputes. Fee disclosure on commitment documents and HUD is mandatory in RCN Capital's broker program, which removes last-minute battles over split sheets.

Your Partnership with RCN Capital

RCN Capital's broker program is the foundation of developing a successful private money lending business. Our recent expansion to more than 8,000 transactions per year with 20% year-over-year volume growth illustrates our dedication to broker success.

Transparent Compensation Structure

RCN Capital offers flexible compensation options based on your involvement level:

• Yield spread and points for active deal management
• Flat finder's fees for referral-only arrangements
• Average broker earnings of 1.2% of funded loan amounts
• All fees are disclosed on commitment letters and settlement statements

Comprehensive Support Infrastructure

Your success depends on reliable support systems. RCN Capital offers:

• A dedicated lending team members for consistent communication
• White-labeled marketing materials and co-branding opportunities
• Access to preferred vendor networks for appraisals and title services
• Training programs and ongoing education resources

Taking Action in the Private Money Lending Market

Today's market conditions favor brokers who have the ability to provide speed, flexibility, and dependability to their investing clients. RCN Capital's full-service broker program offers the tools, training, and financial support necessary to create a successful private money lending business.

Contact RCN Capital today to discover how private money real estate options can assist you in creating a more profitable and sustainable brokerage.