It’s fair to say that Warren Buffett can be described as a thoroughbred “money man”. He has made billions of dollars in profits from his investments for close to 60 years.
Yet when it comes to playing poker Warren Buffett is an extremely cautious individual, in spite of all his wealth and experience from his investment projects. Warren Buffett’s attitude to poker is:
“If you’ve been playing poker for 30 minutes and you still don’t know who the patsy is, then it’s you!”
(The dictionary definition of a “patsy” is someone that is easily cheated or victimised.)
Therefore, when someone of the calibre and with the expertise of Warren buffet accepts that in some circumstances he does not hold all the cards, regardless of his past successes in the business, then what does that tell a borrower about his position of strength when searching for a suitable bridging loan?
During the period when credit was easy to obtain (i.e. 1997 to 2007) it was the borrower who had the upper hand. Property investments were abundant. Financiers were eager to get a piece of the pie at whatever price. The capital markets were forever seeking suitable projects to invest in and eventually this went to every level in the economy, which meant bridging loans as well.
During this time if someone had even a modicum of experience, they could secure a bridging loan very simply indeed. Actually, bridging loans, mortgages, secured loans … almost all types of finance were available without any trouble. A borrower could, in effect, take a very short walk to a lender, say their name and if this carried any recognition whatsoever, they would get money. Just like that; as if by magic.
However, the financial markets have doled out a fundamental lesson to us all, lenders and borrowers alike, which is this:
Cash is not supposed to be “as-easy-as-you-like″ to obtain.
Forgive the seemingly flippant expression above but that is exactly how many borrowers have become conditioned to regard bridging loans and other forms of raising capital. Borrowers are meant to demonstrate that they have a truly viable project. Borrowers are meant to prove that they and their project can pay the lender his interest and return the principal. Borrowers are meant to show that they, too, are putting their neck on the line and they are willing to share a good amount of risk with the lender.
However, the problem occurs when the borrower thinks he is the one in the position of strength and he fails to show or prove any of this. But, once again, is it the Lender’s money or the Borrower’s?
As silly as this question sounds, the borrower needs to understand that the lender is the one in the position of strength and of the two parties it is the borrower that is more likely to be the “patsy” (not literally, but you get the point). It may turn full circle in the future but right here, right now, that is where we are at.
No matter what type of finance you are looking for, bridging loan, mortgage, secured loan, it doesn’t matter, you need to realise that as the borrower you are not in the position of strength in the current market; the lender is. Give a lender what they are looking for and, more than likely, you will receive the bridging loan you require.
More articles on bridging loans can be found at the Bridging Loan Direct website. With bridging finance advisers on hand, they will help you get the finance you are looking for.
