Finances can make or break your real estate plans. Without the right resources in place, you’ll have a harder time swinging your deal no matter how great of an opportunity it is.
A real estate lender is one such valuable resource, but you’ve got to be prepared before you meet with them so you’re seen as a strong borrower. Before you meet with a lender about your real estate deal, here’s what you need to do.
Outline your success
If you’ve already had rental properties, gather their statistics together so you can build credibility with the loan officer. This includes your occupancy rate, cash-on-cash return, tenant longevity and your gross yearly rental yield. Be prepared to demonstrate how you currently manage your properties or bring a certification that shows your contract with a property manager.
Detail your needs
Be ready to explain how much you need and why you need it in a clear and concise manner. The lender will want to know where the money is going, and if you can’t provide a detailed answer, you’re going to be in trouble.
Be prepared to show commitment
You’re going to be expected to have a down payment that shows you’re committed to and serious about the deal. You’ll need at least 20 percent of the purchase price as a down payment, but be ready to put up more if necessary to close the loan or get a lower interest rate.
Have property specifics ready
Have all the details about the investment property you want to buy detailed and analyzed on paper. At the very minimum, you should be able to show the lender estimated renovation expenses, your estimated gross yearly rental yield, and the property’s fair market rent. Because of the lender’s underwriting criteria, their assessment may differ from yours, so you need to be able to professionally explain your information without becoming upset or angry.
List some questions
Have a list of questions ready to bring with you to ask the lender. It’s vital that you fully understand the lender’s criteria, what they need from you, and what potential snags could arise in the future.
Remember that no two lenders are the same, so what one lender requires may be different from the next. If you’re as prepared as possible before you step foot in that loan officer’s office, you’ll stand a much better chance of landing your funding.
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