Lender Questions For A Newbie

[Tyler Jennings]

Hey everyone!

You guys (and girls) have all been a great help to me, so thank you very much! I'm getting close to taking some actionable steps to get my first deal. I'm a little stuck on what questions I should be asking lenders when I go to try and get pre-approved. Also, how wxactly does that process work? To add some context: i'm looking to BRRRR a SFH. So if anyone could give me some insight on what I should be asking these lenders, how to approach the situation, and things to avoid. Thanks a ton!!!

[Kaitlyn Beard]

Hey Tyler!

First off, that's super exciting! Getting your first deal is a, no pun intended, BIG deal! One of the things I will first ask is... do you plan on making this a "quick" BRRRR? I ask because it will differ on how you plan on financing them. Do you plan on living in the property as a primary residence during what's called the "seasoning period" or do you plan on putting down 20% for a conventional loan? Do you plan on getting a hard money loan, etc.? There are endless ways to fund a deal. I'll share a little of what I do with my BRRRR strategy, because you can always tweak a common strategy for it to best fit your situation and/or goals or needs. Some people BRRRR a property with hard money loans and refi to get the capital they put into deal back to reinvest and repeat the process. This can be a couple months, or you can BRRRR a property over a couple of years. No one ever said it had to be quick. I actually was just listening to one of the BP podcasts and I think it was either Brandon or David who said this. As I know this already, I had to remind myself, because I get so eager to get the next deal, because as I mentioned earlier... it's EXCITING! So off with the tangent, I purchase homes as my primary residence (0% down with VA loans, but you may qualify for conventional at 3-5% or FHA at 3.5%). I then live in the house for 12 months and during that time, I renovate the property. I also "house hack" which is having people live in it with me as roommates and they essentially cover the mortgage. This is a VERY effective way to get these things done especially when you are on a budget and are trying to maximize your earnings/investment. After the seasoning period of 12 months, I then rent it to whoever and move out. Sometimes that means ending the lease with the current roommates and finding a new set of tenants, and sometimes it means those roommates get to stay if the rent numbers make sense. After time, I will refinance and repeat! With the VA there are some rules to refinancing so if you're curious I can go into it. Overall, it would be better to know exactly what you know your options are and/or what your current plans are. If this is your first home, it's fairly simple to qualify with a lender. It starts to get more complex, per se, when you have multiple properties or are tapping into creative financing. Hope this helps, and let me know if I can help answer any of your other questions!