5 Lessons I've Learned About Finding an Investor-Friendly Lender

As you probably know, finding financing that’s conducive to your situation and goals is hardly a cake walk. First of all, there are thousands of lenders out there–when I first started looking I was overwhelmed by the number of options available. I found myself unsure of where to start and what to look for in an investor friendly lender who is familiar with house hacking.

One of the most challenging aspects of finding a good lender was understanding the unique differences between each one. I found that each lender had their own set of requirements and criteria for approving loans, which made the process more challenging. It was crucial for me to understand the lender's strengths and limitations to determine if they were the right fit for my specific situation.

But if you’ve never interviewed a lender or are new to real estate, how would you know where to begin? Here are 5 lessons I’ve learned.

1. Look for Lenders Who Invest in Real Estate Themselves

Working with a mortgage lender who invests in real estate themselves can offer several benefits. Lenders who invest often have a deeper understanding of your mindset. As such, they can provide valuable insights and advice that other lenders may not be able to.

They also understand the importance of finding the right financing options. That means that they will likely be more flexible in their loan terms and products because they’ll be selling what they believe in or even use themselves.

2. Ask for Referrals From Other Investors in Your Area

By establishing relationships with other investors and industry experts, you can gain access to a wealth of knowledge and resources. Remember that rockstars work with rockstars. A seasoned and experienced investor who has been around the block knows who the best lenders are and can point you in the right direction.

An added benefit is that asking for referrals can help you to save time and effort in your search. Rather than having to sift through endless options and evaluate each one on your own, you can rely on the recommendations of others who have already done the legwork for you. This can help you to streamline the process and find a lender more quickly and efficiently.

3. Be Able to Articulate Your Goals to Potential Lenders

How can you get what you want if you don’t know how to explain it to someone else? Without clear communication of your goals, you may miss out on these tailored loan products and end up with a less favorable financing arrangement.

By effectively communicating your goals, you can ensure that your lender is aware of your specific needs and can tailor their services and loan products accordingly. This can help to ensure that you are able to secure the right type of financing for your investment goals and can avoid costly mistakes or missed opportunities.

It’s also important to let your lender know that you’re in it for the long haul rather than just being another one-off transaction. Lenders are often more willing to work with borrowers who can be repeat customers and who have a clear vision of what it looks like to build a successful portfolio over time. This will make them work harder for your business and ensure that they leave no stone unturned when examining options.

4. Creative Lenders Say “How Can You,” Not “You Can’t”

Someone who gives up before getting started is not committed to helping you succeed. Creative lenders are solution oriented rather than problem finders.

When I asked about low down payment financing options for owner occupied multi-families, you’d be surprised by how many people said “you need 25% down.” There was also a huge group that said that 5% down was impossible and that I’d have to do an FHA loan. As I continued to call around, I did find people who got creative and identified 5% down solutions–-guess who I’m working with?

5. Ask About Their Loan Products and Interest Rates

Different lenders offer different loan products with varying interest rates, fees, and repayment terms. By comparing the loan products and interest rates offered by different lenders, you can determine which lender offers the most favorable terms for your investment goals and financial situation.

Additionally, understanding the lender's interest rates and fees can help you accurately calculate your potential return on investment and determine whether the financing arrangement aligns with your investment strategy.

Compare Lenders and Make a Decision

Following the tips we've discussed will help you simplify the process and improve your chances of finding the right lender. Now all you have to do is weigh the pros and cons of each to make your final decision. Not all lenders are created equal, so be sure to choose wisely!