advice for talking with lenders

[Brian Kreitz]

I am new to investing and want to start talking with lenders in my area. I plan on doing buy and hold properties. What questions should I ask? What should I say/ not say? Thanks for the help.

[Joshua Fulenwider]

Brian, all of what I am about to tell you is catered towards speaking to a commercial/portfolio lender.  If you are seeking conventional financing the criteria will be different.

Develop a business model (doesn't have to be a full business plan) but you should know what you are pursuing.  For example, if you are exclusively going to be pursuing 3-4 bedroom single-family homes in a college neighborhood and are going to focus on college rentals which you are going to hold for the next 7-10 years is a pretty defined focus that allows a lender to know you have done your homework and know what is going to best suit your personality.  You can have a multiple ideas as to the type of investment but make sure you know your reasons as to why you are pursuing those types of properties.

If you have a property in mind already you should come prepared with information on the property (estimated purchase price, number of bedrooms/bathrooms/garage spaces, estimated repairs, estimated rents, etc.)  Be sure to back these numbers up with some research (i.e. rentometer.com for rents, bids for repairs, or a home depot checklist).

Be prepared with your numbers.  If they are interested in financing you they will typically need to evaluate 3 years of tax returns and see a current balance sheet for you.  If the property is currently rented what is it rented for and when is the lease up?

Lastly, put together a letter of investment history.  If your experience is pretty thin you can dress it up by mentioning any classes you've attended, real estate networking groups you belong to, stock market investing experience, any relevant work experience, and also who you have on your team (business partners, your realtor, property manager, contractor, accountant, etc.)

Let me know if I can explain anything further.  Hope this helps.