Investment property financing
One of the first questions a broker should ask their clients is whether they are planning on purchasing a home as their primary residence or if this is going to be an investment property. Once a broker knows the answer to this question, they can lock in on a few options that best suit their client. Private lenders are typically looking for investment property transactions to fund, but different private lenders specialize in different property types. There are lenders that specifically deal with commercial buildings and large multifamily properties while others specialize in ground-up construction or fix and flip deals.
This is where a broker can utilize their connections to point their client in the right direction. Bringing the right deal to the wrong lender can end up backfiring and lead to delays and even failure to close a loan. Brokers that organize and prioritize the right private lender for their client when they are investing in real estate are game changers. Once it’s determined that a private lender is the right fit for a client’s investment property, there are other factors that come into play that only enhance a client’s experience.
Less stressful approval process
Another reason why a private lender can be the preferred fit for a broker’s client is the approval process, which is much less stressful than conventional lending or a loan from a bank. If a broker knows their client is considered borderline in terms of getting approved, finding a private lender that allows for ease of approval while also ensuring the deal benefits all parties is a must.
It’s important to reiterate to a client that private lenders place less emphasis on the individual and focus more on the property and the deal itself. However, additional aspects that can lift stress off the potential investor may include lower FICO score requirements, no annual income statements or tax returns, no proof of employment, and even no debt-to-income requirements. A broker should be aware of all the benefits a private lender offers their potential client and be able to articulate why this option should be their first.
It can be easy for a real estate investor to get discouraged if they continually find properties but can’t get approved and fund the deal. If discouraged investors are leaving the industry, that means brokers have less opportunities to foster relationships and build wealth with potential clients. For this reason, it is imperative for brokers to find ways to get their clients approved, and working with a private lender is a surefire way to make that happen.