We’ve recently launched a new funding portal that allows real estate investors to receive multiple offers from several hard and private money lenders in minutes.
The introduction to lenders ready willing and able to lend on all your deals is key to success, however there is a lot more to know
If you’re new to real estate investing, funding your deals may leave you with more questions than answers.
- How do you successfully get your first deal funded when you don’t have a track record?
- Exactly what does it take and cost to get loans as a new investor?
- Are there extra hoops you’ll have to jump through? Extra pitfalls to watch out for?
- How can new real estate investor get funding easier?
Getting capital for real estate deals can be a bit more challenging for new real estate investors. Hard & Private Lenders are typically much more comfortable with experienced investors who have a track record of successful real estate investing activities. Sometimes just getting a foot in the door can be a challenge. Then, there can be underwriting challenges with investor funding. And without the knowhow and experience, newer investors can be taken by predators looking to prey on new those who don’t recognize the red flags in a bad deal. The good news for the new and experienced investor is there are solutions for safely and adequately funding all types of real estate investment deals
Specific Challenges Facing Newer Real Estate Investors
- Sticker shock
- Inability to use history of income from real estate to qualify
- Down payments are larger
- Reserve requirements are larger
- Being unwittingly lured into committing real estate and mortgage fraud
In a nutshell, the lack of a track record means that REI lenders will be much more cautious about how much money they will loan for ‘experimenting.’ And although asset-based loans are primarily underwritten based on the property, many lenders are extra cautious with new investors who’ve yet to turn a property into profits. It’s mostly common sense, but these can be common challenges that many new investors don’t expect – most think that their great deal is all that’s needed to get capital
The best defense for the new and experienced property investor is to ask a lot of questions, know your mortgage terminology, consult with others who are more experienced, and don’t be afraid to do some comparison shopping.
What to Look for in a Real Estate Lender
- An investor friendly REI lender that wants to do your type of deals
- A lender & loan officer serious about building real relationships
- A loan officer that asks you the right questions
- Does not charge larger upfront fees
- Responsive to all your emails
- Honest about lending guidelines & the potential to offer a loan
You’ve got to find the right lender who specializes in new investor funding and your type of deals – or the process will be painfully slow at best. And we all know that good deals require quick action – more than one deal has been lost due to financing hiccups.
Here’s a resource to learn more about what a hard money loan is along with typical costs and qualifications: HARD MONEY LOAN – WHAT IS IT?
Your direct lender or loan officer should care about building a long-lasting relationship. A good officer will recognize that investors often ‘come back to the well,’ and will need funding again and again. So look for those serious about asking the right questions, and that will provide references from past and current clients. ALWAYS Ask for references from other industry professionals like title companies and Realtors.
A great lender or loan fficer won’t just ask the questions needed to fill in the blanks on a application. They should ask what you want to achieve and what your longer term plans are. That way, they can truly provide loan and lending options which best make those plans a reality.
How to Improve Your Funding Success as a New Investor
Improve your attractiveness as a borrower:
- Bring in a partner with experience, stronger financials, better credit and cash.
- Do your homework. Don’t wait until you have a deal in hand that has to close quickly. Start researching and building lender relationships before you need them. Get to know requirements and underwriting guidelines.
- Be patient in scaling your investments.
- Put your best foot forward when submitting a loan application. They’re complete and honest. Make the lender’s job easier and you’ll close faster.
- Be pleasant to deal with and always prepared.
Do this and you can look forward to much easier borrowing, streamlined processes, and even preferred terms. New real estate investor funding is readily available. But you have to jump through a couple extra hoops. With the right approach, it is possible to go from zero to hero and have lenders compete for your business.