3 Pre Approval Tips from an industry vet with $200M+ in Sales

[James Wise]

I know everyone is all big on the "fake it till ya make it" and "hustle hard" mentality. As someone who bootstrapped a business from nothing to over $200M in sales I can respect the hustle. But I've got to set some of you folks straight on some of the crap I've been seeing with your pre approval letters.

1. Cash is cash. A Hard Money Loan or a Private Loan is not cash. It is a loan. 

I get this one a lot. Newbie says they want to present a cash offer and after I request proof of funds they send me a pre approval from one of the two types of lenders above. This leads to me telling them that it's not cash and explaining that it's a loan. Ultimately leads us down a discussion where they tell me I am wrong and I've got to say something incredibly offensive about their intelligence, thus leaving their feelings hurt.

Let's avoid this from the rip folks! If it ain't money in your bank account, it ain't cash. Simple.

2. Pre Approval is too low.

This one is pretty simple and obvious. If your pre approval says you can buy a $100k house it's doing you no good sending it to me on a $200k house.

3. Pre Approval is too high.

You wouldn't think about this one as a problem, now would you? It is though in extreme cases. For example today I received an email from an investor looking to make an offer on a $99k triplex I am selling. Dude sends me a pre approval letter from a suspect lender I've never heard of.

Terms of this loan are for a $700k house in another state with him needing to put down $175k. Bro, clearly this letter you've sent me serves no relevance to the deal. I can tell you've

• Done ZERO research on this deal.
• Have taken ZERO steps towards buying an asset in this asset class
• Have ZERO idea if this schmuck lender you've got can even write this type of loan
• Have ZERO idea if this schmuck lender even loans on properties in this state
• Have ZERO idea what types of terms this schmuck lender would even offer to you
• Have ZERO chance at closing the sale

So as you're getting things rolling, if nothing else, you should add these 3 things to your list of things not to do in real estate.