A good Lender Relationship is critical to an effective real estate investment strategy.
Jimmy Moncrief of Real Estate Finance HQ, is an accidental real estate investor. He had a solid income from his analyst/ partner position at a hedge fund, yet he struggled to get a loan for an investment property.
Jimmy did not even need the loan. He could have paid cash for the property, but he recognized the benefit of leverage. So, where is the most likely place to get leverage? The traditional place to get leverage is from a bank.
But, if you don’t understand the rules to financing, your ability to get a loan will be limited.
First, decide what is important to you.
These are critical to determining the path you want to travel.
If you chose to just dip your toe into the real estate investment world, you might purchase a single family property, near your home. You can purchase it in your own name and get conventional financing; put 20% down to get a 30 yr mortgage. Most of this can be done online or through email with little or no relationships necessary.
If you really want to grow your portfolio, you are going to need a solid lender relationship. That’s right, get to know a banker. Infact, if you can develop multiple relationships, that’s even better.
When should you get to know a Lender?
Don’t wait to start. The sooner you can create a lender relationship, the better your chances of success will be. Get to know how a lender looks at a deal and what they need from you in order to approve a loan. This knowledge will give you the ability to work with your real estate broker to negotiate a number that will works for you and the bank.
Too many would be investors spend all their time chasing a deal. Then they try to find financing. While this may work for the networked investor, it likely spells failure for the novice investor.
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