Note: One of the biggest challenges real estate investors face is finding the money to fund those first few deals—even when they have some cash themselves. I sat down and talked with Russ Whitney, internationally known and respected leader in the real estate investment and financial training field, and here is his advice:
Russ Whitney: She needs to shop around for a different lender. She probably went to a branch of a mega-bank that has very strict rules and the people in the branches do not have the authority to operate outside those rules. Another lender may look at the deal far more favorably. whitney bank
The lender is going to make money on the deal through the interest on the loan and various other fees, such as points and closing costs. JT: If the bank is going to make money on the deal, why do they turn down loans?
Banks make money on loans that are paid back on schedule, so they have rules and policies that are supposed to help assure that they make good loans. Unfortunately, sometimes strict rules don't allow a bank the flexibility to work with a creative real estate investor. But just because one bank turns you down doesn't mean you can't get the deal funded. RW: I recommend dealing with a good mortgage broker. Their job is to bring borrowers and lenders together, and they only get paid when the loan closes. They are a tremendous resource for real estate investors because they do all of the loan shopping for you, and the lender pays their commission. A sharp mortgage broker will help you structure the deal and then take it to the right lender.
JT: What do you mean by "the right lender"?
RW: Not all lenders are the same. They have different requirements, they like different types of deals. A hard money lender focuses on the value of the property and the loan-to-value ratio. Also, different lenders offer a range of terms. RW: Start by checking the yellow pages of your local telephone directory. Many brokers will advertise in the real estate classified section of the daily paper or in the weekly shoppers and real estate publications. Sit down with the broker and explain your investment strategy and goals. Ask if he works with lenders who want to fund the kind of deals you want to do. The broker should be enthusiastic and positive about what you're doing--if you sense that he's being negative, find another broker. forex factory