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Everyone wants to make money fast, however, whatever venture you decide to embark on, without a clear plan in place and goals to work towards, the money might be in short supply. This is especially true for residential real estate investors, and particularly for those seeking to explore fix-and-flip opportunities.
Particularly if you’re a first-time investor, the process for receiving an investment loan may seem daunting, but there are things you can do to ensure a seamless process that results in an outcome worth celebrating.
Know your credit
It’s difficult to have a plan ready if you don’t start with the basics. Checking your credit score to know where you stand on the financial spectrum is a crucial component to ensuring you get that loan. While a low credit score won’t automatically disqualify you from getting that financial support (private lenders, for example, are more likely to review an investor’s total package rather than just the numbers), it could affect the size of the loan or its interest (traditional loans given by banks could be a harder sell if your credit history isn’t up to par).
Have a roadmap ready
Nothing can calm nerves or self-doubt like over-preparation, and when meeting with a financial lender to discuss your business goals, over-preparation is key. Be ready to talk about what your long-term and short-term goals are, your timeline for turning a project around and putting it back on the market, as well as what your budget is. Coming prepared to a meeting shows the lender that even if you are new to the world of real estate investing, you’ve done your homework and are ready for the challenge.
Compare your lending options
Traditional loans are acquired through banks when an investor provides a down payment in exchange for a lien on the property secured by a mortgage. Private money lenders are often more interested in an investor’s experience, collateral, and borrower’s performance rather than credit score and income. Peer-to-peer lending connects peoples or entities able and willing to loan money with people or businesses that need to borrow.
These are just a few of the options you can be considering. If you don’t know which lending option is best suited for your fix-and-flip goals, we suggest going back one step and working on your roadmap. Part of having a plan ready is knowing which lending options can support your needs.
It’s who you know
Networking and strong connections in the real estate industry can be instrumental to your success and like most things, sometimes word of mouth and referrals can get you the best connections. Developing trusted relationships with local contractors, realtors, and small banks can eventually lead to trusted relationships with local lenders. Many lenders aren’t necessarily looking for a one-hit-wonder investor, so if you can develop a strong rapport with one from the very beginning, your chances of having a personal lender for all future projects is significantly higher.
Partner with a seasoned investor
Beyond just networking with the right people and getting familiar with the real estate scene, it’s also often massively beneficial to team up with a seasoned investor with a robust portfolio. Think of it as a mentorship of sorts. While there’s value in stumbling through new experiences by yourself, why not find the opportunity to gain support, capital, and insight from someone who has been there, done that? Seasoned investors can connect you with valuable people in the industry that could lead to continued professional relationships, provide informed insight on the market, or provide financial support.
Working with a seasoned investor can give you the opportunity to explore what your strengths already are vs. where you need to still grow. There are more people invested in your success – thus making success more likely. The benefits can feel boundless, but make sure you understand what your terms are, what your goals are, and what kind of role you want your partner to have.
Investing in real estate can be an incredibly lucrative and rewarding way to put your money to work. Knowing how to handle the process of securing a loan – and doing so more seamlessly – will make the ride that much more fun. If you’re ready to discuss your fix-and-flip project with a trusted lender, contact Temple View today.