Why rapport with your team can mean a lot.

I am currently under contract for a very large, 3,800 square foot duplex. I expect it to rent out for $2,300 a month total. At first I was planning on using my hard money lender to purchase the property, put a small of amount of work into one side before renting it (the smaller side is rent ready), then refinancing out with a local bank at a decent interest rate. Unfortunately, the appraisal came back much, much lower than I was expecting it to. I didn't agree with the appraisal at all, actually, but there wasn't much I could do. Thus, my hard money lender is not going to be able to finance the deal, and I definitely wouldn't be able to cash myself out very quickly at all.

So, as a last resort, I contacted a lender that I have a couple of other loans with and have worked on a few other deals on. This lender charges a higher interest rate the in the local banks would charge me, but it is a 5 year note amortized over 30 years. The duplex would still cash flow $150 per unit after my expenses at their rate.. It is a financial resources firm that helps clients find investments, and in the last couple of years they have started doing real estate loans to add to their investors' portfolios. Usually, they only lend up to 70% of a deal as well. They sent out their appraiser, who is usually a bit on the higher side of things, so I had my fingers crossed.

Low and behold, the appraisal was a bit higher, but not enough to get the deal done. This appraisal would still put the deal at 76% ARV. After seeing this, I immediately called the listing agent (I am the buyer's agent for myself), and explained that I wouldn't be able to move forward. I signed an earnest money release form to receive the money back, but the seller had not signed anything quite yet. Then I emailed the lender apologizing for wasting his time and telling him we'd find another deal to do together. That's when I got a call from him right away. He said, "well, Luke, we don't usually lend more than 70%, but I am going to drive by the property and if I like it, we'll probably do it. I was ecstatic. He may call tomorrow morning and say the deal is still off, but that doesn't really matter for the sake of this post.

Now before someone thinks, "well you might over leverage yourself at 76%, and you'll have to keep some of your own money into the deal", I'd say "so what?" I may have someone willing to finance the deal, the home does not need much work at all, and it will cash flow fairly well, and I will still have a fair amount of equity. I don't see anything wrong with that. I may decide tomorrow that I don't want to move forward because I'd rather put that money into something else, although I probably won't if he says yes. But, that's not the point of this post either.

The point is, a deal that looked absolutely dead at one point, may actually be back on track. And, it's all because I seem to have a good rapport with this lender. If I didn't have this rapport, the deal would definitely be done, and I'd be right back to where I am. Like I pointed out, the deal may still be done, but I now realize that if I continue to build rapport with important members of my team, or new ones, that they may be willing to do things for me that they don't normally do for others. I like the sound of that.