All Forum Posts by: Noah McPherson

I often hear stories on the BiggerPockets podcast about investors calling dozens of banks to find creative financing solutions (things like no seasoning requirements, blanket loans, portfolio lending, etc.).

I'm curious how this works in practice. Wouldn’t contacting so many banks result in multiple hard pulls on your credit report? Or is there a way to ask the right questions before submitting a full application?

Any insight into how experienced investors navigate this process would be greatly appreciated. I’d love to learn how to do it efficiently (and protect my credit at the same time).

I think if you are shopping it, you should have a PDF of your full scenario and email it to the lender.

The PDF should include the following:

1. Address

2. Purchase Price

3. Rehab Cost

4. Current Market Value

5. After Repair Value

6. Long term or short term rental income (actuals and estimated market rent)

7. Annual taxes

8. Annual Insurance

9. FICO Score Estimate

10. Investor Experience (I.E. How many rentals do you own, long term and short term, How many Flips have you completed in the last 36 months?)

11. Any pain points on the deal? (I.E. Rural, small square footage, Sub $100k Value, Lack of Experience, Credit Lates, Higher Lease compared to market rent, seasoning, Below 650 Fico, or any strange circumstances)

Once you get some rough terms, structured specifically to your scenario then I would base my decision on reputation, visibility, and overall communication skills.

What I commonly get is an Investor that is trying to get to the rate, without giving me any information. That's as good as sticking gum on the wall and seeing if it will stick. You will be spending hundreds of dollars on an appraisal, weeks going through the process and you may come and find out that this lender that told you what you wanted to hear, changes the terms on you the day before closing. Make sure you do your due diligence, and don't call blindly.

Thank you for the valuable insight, Erik. Creating a PDF with the full scenario is a great idea and will definitely help streamline the process for everyone involved. I’ll also be sure to keep in mind the importance of reputation, visibility, and strong communication when evaluating lenders. As you pointed out, the terms mean little if the lender changes them last minute, or if poor communication complicates the deal or the relationship. I really appreciate the advice. Thanks again!

1 Vote

Quote from @Stephanie Medellin:

If you already know your credit score and you're upfront with your financial situation and with what you're trying to accomplish, you should be able to get a general idea of what options are available without another credit pull.

If you're looking for something specific, it's ok to call around and ask if a lender has that option available. They will probably ask some questions to determine if it's even the best product for your scenario. Many times these unique programs may not be the best fit, and there could be something more mainstream that you can qualify for.

Okay, that makes a lot of sense. One could probably do a most qualifying and disqualifying just by having conversations and being clear on things like credit score, DTI, etc. Thanks for the advice!

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Quote from @Brandon Croucier:

Quote from @Noah McPherson:

Quote from @Brandon Croucier:

If you have an idea of what your credit score is, a lender should be able to offer you terms based on that info. If agreed upon then you can proceed and have them run your credit.

Okay, excellent! I was unsure about the pre-approval process because I recently turned in my information after the lender had promised to pre approve me before doing my credit pull. Then they immediately did a hard pull up on submitting my application. Not a big deal. It's probably avoidable next time, but it does make me wary of trusting the pre approval process.

Large banks & lenders typically do not care and have a more streamlined pre approval process involving a credit pull. I recommend working with a broker as they usually have better rates (less overhead cost) & a better overall experience.

Okay, I will give the broker route a try next time. Any recommendations on what real estate investors should and shouldn't look for in a broker?

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Quote from @Brandon Croucier:

If you have an idea of what your credit score is, a lender should be able to offer you terms based on that info. If agreed upon then you can proceed and have them run your credit.

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Quote from @Jeff Wills:

If you find a broker who is also a direct lender (Gershman Mortgage, as an example) then they will be able to do that for you. They have access to over 33+ lenders, and can do NON-QM loans internally allowing you flexibilty. With the right lending partner, you can forgo this route entirely. A soft pull is likley required here, but at least it will not be multiple soft pulls.

Thanks for the insight! That is a good idea to not harm your credit, and it sounds much more efficient. I'll look into seeing if I can find a lender/broker like Gershman that services MN. Thanks!

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Quote from @Joe Impagliazzo:

Noah

Ask all the questions you can, however most lenders now can do a soft credit pull. I would find that out once you get deep enough into the conversation. In my experience banks do not and usually have strict underwriting guidelines as they want A+ paper (I've managed at a bank and worked at direct lenders) but that doesn't mean there are not banks or credit unions that do not.

Hey Joe,

Thanks a lot for the advice—I really appreciate you taking the time to share your experience. That makes total sense about banks aiming for A+ paper; I don’t blame them for wanting to mitigate risk. I’d probably do the same if I were in their shoes.

Thanks for the tip. I’ll definitely keep the soft pull option in mind moving forward when I’m talking with lenders. I knew soft pulls were possible but wasn't aware it was common.

Thanks again!

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Any insight into how experienced investors navigate this process would be greatly appreciated. I’d love to learn how to do it efficiently (and protect my credit at the same time).

3 Votes

Quote from @Clare Pitcher:

Hi Noah! This is completely understandable that folks don't want to move around in the cold/ winter. I am in the Milwaukee market and we deal with this often. We try to have all of our leases end in March-June so it is easier to lease the property in the spring/summer. However, it happens sometimes that the lease ends in winter and we have a vacany. We try to offer a winter promotion of $200 off the first few winter months then make the lease 14-16 months so that the lease end date is not in the winter again!

Okay, thanks for the advice. I like this idea because it reduces the potential vacancy I could have by doing a short 3- to 4-month lease that ends in April or May, then starting over with a year lease. Do you get nervous about the long-term commitment of a 14- to 16-month lease? My guess is it wouldn't be as critical in an A- or B-class property as it would be in a C-class property.

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Quote from @Drew Sygit:

Noah McPherson all good info from the other posters!

So, winters are the traditional slow times for sales & rentals. You can see this in the graph below:

The graph also shows that DOM is worst in 2024 than any of the previous 6 years:(

So, you are not alone in experiencing this.

Now, just don't take this as a pass to not try harder to find your own solution for this problem:)

Thanks for the data. I was looking for something along those lines to affirm what I was experiencing. I won't take it as a pass, though. I'm almost glad I got to experience the longer vacancy. It usually sinks in a lot more when I experience it versus just hearing it in a book or podcast.

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Quote from @Tim Delaney:

Quote from @Noah McPherson:

Thank you Tim. Knowing that I'm not the only one is very reassuring. I have been experiencing what you're talking about. The leads I'm getting for potential tenants are not the best. I suppose I'll just wait until I find a good applicant and be grateful I won't have a vacancy this time next year.

Just remember not to do a 12 month lease if you find someone this month or next! I usually like to start it shorter to be safe if I need to end the tenancy, but I know some people opt for the longer 14-15 month leases.

Okay, thanks! Maybe I'll make a policy to schedule all our leases to end in a spring/summer month range.

1 Vote

All Forum Posts by: Noah McPherson

Noah McPherson has started 49 posts and replied 127 times.

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: How to Talk to Multiple Banks for Investment Loans (Without Hurting Your Credit)

Post: Long Winter Vacancies

Post: Long Winter Vacancies

Post: Long Winter Vacancies