Many people have no idea how much demand there is for the services of hard money lenders. However, statistics show that the United States generates more than $570 billion yearly in real estate loans and collateralized debt! More than 548,000 people around the country are employed to provide for all the demand for such loans.
Investors thinking about working with hard money lenders want to be sure they work with a lender they can trust. This can be difficult because every hard money lender will claim to have the same dedication to quality service, continuous improvement, and expertise.
However, suppose you can find real estate financing options that make the most out of the power of regular auditing. In that case, you can find a lender you can trust. What is it about regular audits that make them valuable for private mortgage investors?
Audits are a powerful tool that provides a long list of benefits for lenders who are willing to hold themselves to such a high standard. Read on to learn about the advantages of working with a lender who uses regular audits and how audits improve the service that hard money lenders provide!
Comparing Audits, Reviews, and Compilations
In theory, audits, reviews, and compilations aim at the same target: ensuring a company is being correctly managed and complies with internal and external regulations. However, audits hit that target much better as they are evidence-based. Reviews and compilations depend on company leaders' "word" to assess the company. Although most company leaders are honest, depending on their word does not provide a guarantee. In contrast, an audit goes much deeper. It checks company records to ensure that things align with what auditors hear from company leaders. As a result, companies willing to go through audits show greater confidence in their internal processes.
Avoid Private Lending Services Without Expertise
There are many reasons why some companies prefer to avoid audits, the most common being that they do not expect to pass such audits. It can take a lot of expertise to run a hard money lending service as pristinely as possible.
Some hard money lenders have yet to acquire that deep expertise, so they try to downplay the importance of audits. However, audits provide benefits that are almost impossible to get in any other way. Companies with plenty of expertise feel much more secure about how likely they are to receive positive results from audits.
Obtain a Mortgage Loan from an Audited Provider
Sometimes, there is a big difference between expertise and experience. However, it is best to borrow money from a hard money lender with both. The more experience and expertise a hard money lending service has, the higher the chance it will decide to set up audits for itself. People who have not been in the industry very long often do not realize how much value audits provide and how much they do to establish credibility.
Some new lenders in the industry may not even be aware of the choice that they have to make about whether or not to commit themselves to regular audits. Working with a hard money lender that uses regular audits is an excellent sign.
Great Real Estate Investors Look for Committed Lenders
Many people mix up real commitments with words about commitments. There is very little commitment in claiming to have a deep commitment to quality service. However, a much more serious commitment is inherent in subjecting a lending service to voluntary audits.
That may be the most powerful way a lending service can put its money where its mouth is as far as its scrupulosity. That will come in handy again and again as you invest in real estate.
Audits Make Real Estate Investing Safer
Many people focus on the benefits that an audit provides when it occurs. However, paradoxical as it may sound, the most significant benefits of an audit may occur before the audit even begins. How is this possible?
Employees within companies that subject themselves to audits always know that these audits are coming. That provides them with constant accountability. The end result is that they make decisions on a daily basis with the understanding of their accountability at the forefront of the decision-making process.
In the immediate aftermath of last year's audit, companies are likely to be especially aware of any mistakes they might have made. As the audit for the next year is approaching, lenders will be sensitive to avoiding mistakes that might make the upcoming audit go worse for them than past audits.
In other words, no matter what time of year it is, a yearly audit positively affects the accountability and commitment of hard money lenders.
Audits Help Lenders Catch Mistakes
Of course, commitment to providing excellent service only goes so far. At the end of the day, everyone makes mistakes. The difference when it comes to hard money lenders that use audits is that there is a very high chance that they will discover their mistakes.
An audit isn't just an accountability measure. In some ways, you can think of it as an educational measure. Every year audits help hard money lenders understand where they have succeeded and where they can improve.
If a lending service has had audits for many years, you can expect them to have learned a lot from all the past audits.
On top of that, audited lenders correct their mistakes after the fact. That means that you can trust them much more.
You can never be sure that they will not make a mistake. But if they do, they will find out about it when the yearly audit arrives. In the worst-case scenario, that means that such lenders have an opportunity to correct mistakes within less than a single year.
In contrast, lenders that do not use audits may never discover their mistakes, so they could not make up for them even if they wanted to.
Get the Most Value Out of Working with Hard Money Lenders
Working with hard money lenders often means looking through a wide variety of lending options. In such cases, it is best to find real estate financing options that commit themselves seriously to quality service. Any company will assure you of the quality of their service, but not every company will prove their dedication with regular audits.
Get in touch with us to learn more about finding the best providers for hard money loans!
