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Updated over 8 years ago on . Most recent reply

User Stats

247
Posts
76
Votes
Benjamin Barredo
  • Wholesaler
  • Knoxville, TN
76
Votes |
247
Posts

How to bild relationships and get pre-qualified

Benjamin Barredo
  • Wholesaler
  • Knoxville, TN
Posted

Hi everyone. Ben Barredo here from Knoxville, TN, a fired-up real estate newbie that is grinding and fighting to make things happen.

I have a question...well, a two part question.

I've listened to a lot of podcasts, read a lot of forums, and read books telling me to go out and meet bankers, loan officers, and make relationships. How the heck do I do that? Is it acceptable to just walk into a bank and take up a loan officer's time while not really offering to do anything that day? Will I be chased off or looked at like the 90% of "shiny-object" syndrome newbies that talk a lot but don't do anything? Should I wait until I close a few wholesale deals before I try to approach them?

The other part of the question is, how do I get pre-qualified with a letter from a lender so that I can make offers or bid on Auction.com for a 25k foreclosure or something? (has anyone ever used Auction.com? I found it today and there are a TON of cheap SFH on there in my area). Should I wait until I have 20% saved up?

Most Popular Reply

User Stats

182
Posts
138
Votes
Josh Braun
  • Investor
  • Nashville & Chattanooga, TN
138
Votes |
182
Posts
Josh Braun
  • Investor
  • Nashville & Chattanooga, TN
Replied

Regarding your first question - I've found it completely acceptable to meet new bankers and ask for pre-approval. The key here is to make sure you aren't wasting their time with a lot of questions.  Do your research before hand and present your situation fully informed prior to the conversation. Google "what bankers look for to pre-approve". Come prepared with a personal income statement, balance sheet and proof of income. Over prepare and be organized. And yes, if you are going to go the bank route, get preapproved before your have a deal lined up.  When you have your deal lined up, present it to the bank in a full business plan (property description, proforma, line item rehab budget, multiple exit strategies, etc).

Your second question - do your research before buying anything through auctions.  I always recommend folks to not waste their time there and go direct to seller. Much easier to find title issues before hand and less competition.

Regarding deals - you mentioned "as a newbie I don't always know if I'm looking at a deal".  If you don't know if it is a deal, you are going to have a hard time persuading an investor to know it is a deal.  If you find a true deal, investors will bite. Make sure it is a deal though. Present your deal with comps, rehab budget and multiple exit strategies for the investor.  There is no secret formula.  Here is how you do it and it takes work: 

  • Systematically analyze 100 properties in the zip code you are marketing (run .25mile, .5mile, same subdivision comps for similar houses; determine repairs needed, find out average days on market, determine your proforma, identify what purchase price you would have to get it at to make a profit using the 70% ARV formula, determine your profit after all costs incurred)
  • Determine 70% ARV purchase price, rehab budget, ARV, and at least 2 exit strategies for all 100 properties
  • View the inside and prepare a detailed rehab budget for at least 10 of them
  • Post your best 3 properties on BP and ask for folks to give you their feedback on how you analyzed

If you do EXACTLY what I mentioned above, I guarantee you will then know what a deal looks like and your confidence will increase.  I'll be candid with you though, most people don't want to do the above, because it takes work and they are looking for a secret formula.  If you want it bad enough, you will roll up your sleeves and do it though.  That approach worked for me and worked for others I gave the same advice. However, most folks don't take the advice because they want to watch TV on the weekends instead of working the extra side hustle. 

  • Josh Braun
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