Are you looking for a real estate loan or mortgage? Getting a “yes” from a lender (whether it’s a private lender or a traditional bank) is NOT a mystery. Simply ask yourself these five questions and make sure you can answer with a definitive “yes” so you’ll hear a definitive “yes” from your lender!
I remember going from bank to bank and hearing the same depressing sentiment over and over. “Sorry, but we’re not going to be able to give you a loan.” Look for a budding real estate investor like myself then, these words were painful, but they’re so common. And without financing, it’s really tough to build a real estate empire to get that financial freedom.
So I had a choice. I could give up and assume I was just too young, dumb and poor to get a loan, or I could figure it out. So early on in my real estate career, I actually got a job at a bank giving loans. And I learned how a lender decides to approve or reject your loan request. And as I learned how the process worked and what lenders were looking for, everything became easier.
Now, whether I’m pursuing a bank loan or a hard money loan, or a private money loan or some other real estate loan, I rarely have a problem getting financing. Because look, it’s not rocket science. I just needed to ask myself five simple questions and get a yes.
Well, my name is Brandon Turner, author of the book on rental property investing and co-host of the BiggerPockets Podcast, and today I’m going to reveal those five questions that you should ask yourself before applying for a loan. If you can answer “yes” to these five questions, you’ll never have a problem getting a “yes” from a lender again. And hey, if you liked this video, as I’m going thru it, be sure to click that little thumbs up button below the video; let the internet world know this is valuable. Alright, let’s get to the five questions.
Number one, do you have a deal? Look, if you don’t have a good deal, no one’s gonna want to make a bet on you. So make it your goal to understand how to find and identify great deals. The better deal you have, the easier chance you’ll get a yes.
If you want to learn more about how to find great deals, be sure to attend one of the weekly BiggerPockets live webinars where we look for real life deals together, every week, and we run the numbers to determine just how much the property is worth. Find for the next one biggerpockets.com/webinar.
Moving on to question number two. Is this a property the bank or the lender will lend on? Look different lenders have different types of properties they lend on. Some only do single family, some do multi, some only owner-occupied, some only investments, right? Some like fixers, some don’t. You get the idea. So be sure the kind of bank you’re going after is the kind of bank they’ll approve your kind of deal.
Now, are you a solid bet? Number three. Do you have the experience to justify your plan? Look, if you’re brand new to real estate, have no income, no experience, no credit, why would a lender want to make a bet on you? A banker’s job is to make sure that every investment they make, every bet, has a chance of getting paid back. If you find yourself lacking in one of these categories, you might need to find a way to make yourself more of a sure bet. This is when a partner or a financial backer can come in really handy. Yeah, you know, you might have to give away 50% of the deal, right? But 50% of a great deal is better than 100% of nothing.
Alright, number four. Do you meet the requirements? A lot of people think that loan approval is based on some feeling the lender has, but it’s actually much more analytical than that. Most lenders, especially official banks, have a set of requirements that need to be met. If you meet them all you’re going to get approved. If not, you’ll get denied. It’s not like a mystery. It’s more like a combination safe, right like high school locker. The good news is you can learn the combination by simply asking. They’ll have requirements for debt to income, credit score, loan to value, property location, and more. So get to know your lender, find out what they want, and give it to them.
For more than that, be sure to download the free ebook that I wrote. You can get it at BiggerPockets.com/bankfinancing totally free. It’s called, “The Secrets to Unlocking Bank Financing,” and in it I walk through the 12 key metrics that you got to understand and meet in order to get to yes,
Alright, number five. Are you professional? Lenders are busy. They’re often collecting paperwork and processing loans for a dozen different people at the same time. And it’s human nature to want to work on the easiest thing. So if you bring in an old shoe box of papers and drop off their desk and say, “Get to work,” you know, come on. If you walk in there covered in Dorito dust, are they gonna want to spend their time working with you wasting their time?
So show them your professional and how easy you’re going to be to work with by, you know, going overboard. I like to do like you know, give a copy of a PDF report that I generate from the bigger pockets investment calculators. I also including a digital copy of every document and I put all the physical ones in this nice bound plastic cover professional folder. Look! Getting a loan isn’t impossible, especially when you understand the process. So before applying for your loan, ask yourself the five questions in this video and make sure you can answer yes to each.
If you liked this video and want to tell the internet, it’s got some value then click that little thumbs up button for me. It’ll help us reach more people and feel free to ask questions in the comments below the video. And lastly, be sure to subscribe to our YouTube channel to get notified of more videos just like this one. For BiggerPockets.com, my name is Brandon Turner, signing off.
Transcribed by https://otter.ai