When it comes to obtaining financing for real estate investment projects, establishing and maintaining a good working relationship with your lender is an important, yet often overlooked, asset that nearly every successful investor leverages to get ahead in the industry.
Borrowing money can help expand your investment portfolio and increasing your return on investment in the long run. The following is a quick look at some of the ways to efficiently invest your time and effort to establish a good rapport with your lender in order to optimize your investment strategy.
Understanding Your Investment Projects
When you apply for a loan, the majority of lending entities will first look at your credit score and annual revenue among a whole host of additional factors when deciding to offer you funding for a particular project. The good news for those with less-than-stellar credit reports is that hard money lenders additionally factor in other data in order to decide whether to approve your loan application.
No two lenders are identical when it comes to their loan approval process, and the numbers do not always provide the entire story. When you build a working relationship with a hard money lending company, you allow them to see how you undertake real estate projects and explain your collective investment strategy. They will be able to visualize how that particular investment that you are asking them to fund will contribute to your overall financial goals in the future and the potential profit they can make down the road.
Hard money lenders differ in the modalities they use in order to gauge investor reliability and projected success when considering loan applications. They may offer you financing solutions at a more affordable rate or offer you more favorable terms when they have a full understanding of your entire investment portfolio and your plans for the future. This base understanding allows the creditor to tailor their financial offering to your unique situation in such a way that mutually benefits both parties.
The Importance of Advice
When you build the ideal rapport with your hard money lender and are still relatively inexperienced in the real estate industry, you can get expert advice on how to manage your portfolio in the future. A lender can share advice with you about your investment strategy based on their experience and knowledge garnered from working with countless clients that were involved in the same or comparable markets.
The lender can also explain how they view your financial status and plans for the future. This is vital when you are trying to enhance your chances of getting approved for a loan and building your book of business. While you learn about basic funding strategies, the lender is simultaneously learning about your assets and the reasons why you require funding. Without this mutual exchange of information, the lender is likely to invest more time in considering your loan application than simply looking at your credit score—which translates into better odds of obtaining funding when it is all said and done.
Your lending representative can also offer valuable insight from a creditor’s perspective regarding what they want to see from their clients when it comes to loan applications. This will assist you in the future and allow you to specifically tailor and present your future loan applications for real estate projects so that it has the best possible chances of approval. Loan officers and hard money lenders alike also likely know other real estate investors and companies in your local market. This can be a great resource for obtaining networking opportunities and getting involved in collaborative investments. You might be able to find potential partners and vendors through the lender’s existing contacts.
Alpha Funding Partners actively seeks partnerships with new and experienced real estate investors and brokers. We pride ourselves in our best rates and leverage, our fast turnaround times, quicker closings, customer service, and our experience in the industry. Reach out to Alpha Funding Partners today to learn more about obtaining your next hard money loan.