How Successful Construction Lenders Are Like Bear Grylls

This blog post came out of a conversation from Land Gorilla Account Manager, Cecily Cole:

 

Shows like Man vs Wild captivate me because it demonstrates how humankind can overcome adversity. Drop a member of the British Special Forces in a remote location with dramatic terrain, pack in some extreme weather and wild animals, and you have yourself some amazing drama. How does Bear Grylls overcome the challenges he faces? 

He’s an expert in survival. To reach expert status he put in the time to learn everything he could about survival. He physically and mentally trains, both in the field and out. He is prepared to survive. But preparation and adrenaline alone won’t guarantee a straight path from A to B. So Grylls layers on a mental outlook: he expects something to go off course, and he plans accordingly – giving himself the opportunity to anticipate and weigh the risks.   

The same can be true for construction and renovation lenders. Perhaps you don’t have the same diet of bugs and grubs, but successful construction lenders have a few things in common with Bear Grylls: trains to become an expert, flexes the problem-solving muscle,  faces fears, and presses forward with the goal in sight.

 

Training for Construction and Renovation 

Become an Expert. You don’t need to train in the British Special Forces or learn the nuances of grub-eating, but you can consider ways to become an expert in the loan types or loan programs that you offer. Because you already have loan programs running, you are likely on your way to expert status, but maybe you’ll need to specialize or seek out a mentor to help fill in knowledge gaps. Gaps could fall anywhere: marketing the loan programs, educating Loan Officers, underwriting for these very specific and high-touch renovation and construction loans, professional relationships and risk mitigation with borrowers, contractors, or builders,  with managing the loan and communicating with stakeholders during the building phase, to the desired outcome after the build is complete. If it’s a two-time construction loan, you’ll need to have a great experience for the borrower as they seek a take out loan. 

Train Specialists. Grylls doesn’t work on a team, but if he did, he may select individuals that are both flexible and highly trained in specific areas. It takes a lot of training and effort to become an expert, and different specialists can be key to taking your loan programs to the next level. Now is a good time to review your goals, and see how a specialist on your team can benefit your goals. We have seen success from construction and renovation departments when there is at least one expert and a few highly-trained specialists who can support the team as a whole. 

Continuing Education. The longer Grylls is out in the field, the more hands-on experience he gets, and the stronger he becomes. We can only imagine when he has a free moment, that he continues to learn more about survival. It should be the same with construction and renovation lenders. Yes, the more time spent underwriting or managing these loans, the more experience you’ll have and the better and more efficient you’ll be, but one thing is certain in the construction and renovation world: things change. Set up regular inservice for continuing education. For example,  if you are an FHA approved lender, you need to stay on top of guidelines changes.


Creative ways to problem-solve 

We have heard Grylls say he will eat anything to stay alive—- and honestly, that’s pretty desperate. We hope renovation and construction lenders are doing more than simply getting by. But sometimes lemons are presented to you and you’ve got to decide what to do with them. 

Things are changing all the time. Take for example the current state of events that are causing in-person services like inspections to be revamped and look drastically different. We have been appalled when we hear that because lenders can’t do inspections in the manner they have always done it, they aren’t doing them at all. The risks are great, but maybe it’s time to look for an alternative solution that stays in the framework of your risk management policy. Land Gorilla’s remote inspections does this. 

Face Fears

Grylls doesn’t appear to be afraid of anything, but maybe his secret is that he is willing to work through his fear in order to survive.   Construction and renovation lenders that we talk to express fear in the term of risk. Risk mitigation is a very real aspect of construction lending, and a few areas with inherent risk are liens, contractors, and borrowers. 

Your secret then is a sturdy risk management policy. Does everyone on your team understand and abide by this policy?  If your policy could use some refreshing, gain inspiration from the blog post, Why Every Lender Needs a Risk Management Policy For Construction Lending

Liens can be troublesome and the culprit is usually due to an incorrect form. Some lenders just hope for the best, but the lenders who are really facing their fears are doing the due diligence and could be working with partners that help them with the correct form every time

Another risk we see lenders facing, even if they have robust programs, is rooted in the pre-close process with the selection of the contractor or builder. Because this person has such an influence on the success of the project, it’s important that the selection of the borrower or builder follow certain best practices or protocols. The following resources may help with that process: 

Read More: How to Manage Your Risk With Contractor Acceptance

 

Continue to Press Forward

Grylls keeps going mainly because there aren’t any other options for him. While you have options for your loan programs and should always be looking to the future, we may venture to say that things get better the more you develop and build your construction and renovation loan programs. Don’t let a hard or difficult season stop your loan programs in their tracks. 

Yes, unforeseen circumstances may grip the economy, affecting the status quo of your loan programs. But keep going. Rely on your training, trust your team, and rely on your risk management policy; it’s there to keep you successful. 

 

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