We can analyze and chase deals all we want, but if we cannot procure the funds to purchase a property it will be all for naught. In this post let’s discuss three ways to find lenders for your real estate investments.
Three Ways to Find Real Estate Investment Lenders
1.) What type of lender should I seek?
Before you can find a lender you should have an idea of what kind of loan you need for what type of property.
Also, are you willing to take advantage of loans like FHA where you are required to be an owner occupant for the first year. It’s something worth considering – lower interest rates with only 3.5% down needed.
FHA loans can fund properties up to four units. Why not buy one and live in a unit while renting out the rest?
However, if you are looking to buy a single family as an investment or a larger multi-unit then this option likely won’t be for you and looking outside of the major banks is probably the right move.
In such case you may need a private lender or a local community bank that does portfolio loans.
Remember, the community banks generally keep their loans in house and may be more flexible to work with since they won’t be selling it off.
2.) Networking and Referrals
Good old word of mouth is sometimes still the best way to find a good lender. Go to your local REIA meetings or investor meetups. Often you will get good referrals from other investors or meet a lender that can help you.
There is a private lender, Lima One Capital (who I have no affiliation with) that had a representative come regularly to my Tropical REIA meetings. It was there I Iearned about their investor loans that had much less stringent personal under writings than traditional banks. It is more about the property and investment than it is the individual’s credit situation with them.
Granted you will pay a rate premium compared to a traditional bank loan, but it’s still much cheaper than having to go the hard money route, which is really just a short-term solution anyway.
3.) Call and Ask – A Lot!
I have an investor friend that recently started buying properties out of town in an area he had not invested before. Once he decided he was definitely going to invest in that area he called 10 local community banks to discuss portfolio loans.
He basically told each one of them: I plan to build a large portfolio of single family homes and multi-unit properties and I’m looking for a lender to finance them. I’d like to open a portfolio line for this first property and then expand from there. Is this something you’d be interest in and if so what kind of terms can you offer?
Some banks never followed up, but several banks did. After reviewing the all info he decided on one that was the best fit for him in regard to service and terms.
Remember, the banks want you to borrow money so its not all about coming to their specific requirements. Those restrictions mainly exist for the big bank FHA backed type loans that have specific rules and regulations.
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