1. Your Financials<\/h2>\n\n\n\n
If your debt-to-income ratio is 8,000 percent, it doesn’t matter how slick or charismatic you are. No one is going to loan you any money other than perhaps a Mafioso loan shark who hasn’t gotten a chance to break any knee caps for a while and is jonesing a bit.<\/p>\n\n\n\n
By the way, it is my recommendation and the position of BiggerPockets that you avoid borrowing money from Mafioso loan sharks.<\/p>\n\n\n\n
To start with, you need to look at your financials from a bird’s eye view. Create a personal financial statement with all of your assets and debts. Find your bad debts, which I define as any sort of consumer debt that wasn’t taken out to acquire an investment, then start paying that down. The only exception to this, in my opinion, are student loans. Those have such low interest rates that I would rather use my disposable money to invest than pay them down.<\/p>\n\n\n\n
The most important thing banks look at is your debt to income<\/a>. And while it may not be easy to increase your income, you can definitely work on paying down your debts. Remember, to be an investor,\u00a0you need to defer gratification<\/a> and avoid frivolous expenses.<\/p>\n\n\n\n Indeed, one banker told me that one of the reasons we were approved was that he noted how my dad drove relatively old, unremarkable cars. He used this as evidence that we would pay the bank back, as we don’t blow our money on flashy consumer crap.<\/p>\n\n\n\n Access 150+ lenders who specialize in asset-based loans in BiggerPockets’ directory of hard money lenders<\/a>. No matter whether you’re fix and flipping or investing in long-term rentals\u2014or even need a bridge loan\u2014you can find a hard money lender who meets your needs.<\/p>\n\n\n\n <\/p>\n<\/div><\/div>\n\n\n\n Related: <\/strong>4 Ways to Find Private Money Lenders to Fund Your Real Estate Deals<\/a><\/em><\/p>\n\n\n\n Also, run a credit report on yourself and evaluate any issues that come up. Remember, you can get one free credit report a year from places such as AnnualCreditReport.com. You may want to consult a credit counselor on how to improve your score if you have things such as foreclosures or bankruptcies on it.<\/p>\n\n\n\n Here are a few quick points to consider:<\/p>\n\n\n\n Banks would obviously rather lend to experienced individuals than inexperienced. But that doesn’t mean you’re out of luck if you have no experience in real estate. As Brandon Turner notes <\/a>about the 5 Cs of a perfect loan proposal, one C is “confidence” and another is “creativity.”<\/p>\n\n\n\n Put together an easy-to-read prospectus of your real estate investing experience for the lender to see. And if you don’t have any, put together a prospectus of your experience in other fields.<\/p>\n\n\n\n Were you a well-to-do engineer? Talk about that. Did you get a 4.0 GPA in college? Make sure they know that. If you have a track record of success elsewhere, it can be assumed you will be successful in real estate.<\/p>\n\n\n\n That being said, don’t worry if you don’t have much experience in real estate or another field. Many people come into real estate green. You can make up for that if your financials look good and you do the last two parts right.<\/p>\n\n\n\n If you think banking has become nothing more than some lender plugging numbers into a computer, then you are gravely mistaken. Banking is still a relationship business.<\/p>\n\n\n\n When I submit a loan proposal, I try to make it so thorough that it blows the banker away. I want to include every document they want, as well as every other document they might want, in addition to a bunch of other stuff that they didn’t even know they wanted. And I try to organize it an easily navigable Dropbox folder.<\/p>\n\n\n\n In addition, you need to make a good impression with the lender. Take him or her out to lunch, and if you have one, show him or her your office and introduce your staff. Discuss your knowledge of the business and your strategy. If you have a property under contract, discuss why you think it’s a good deal. And let your passion for the business come through. Don’t just speak like some automoton that’s buying real estate because Joshua Dorkin told you to.<\/p>\n\n\n\n Finally, ask questions about what they’re looking for in a loan and don’t be afraid to chit chat about whatever. Avoid false flattery, but there’s no reason not to make a friend with someone you want to be your advocate.<\/p>\n\n\n\n I wrote an article on this very topic<\/a> I recommend you check out, but to sum up the important part of it:<\/p>\n\n\n\n “Remember, you are selling yourself to this person so that they will sell you to the committee. If you come off uninspired to him or her, in all likelihood he or she will come off as uninspired to the committee.”<\/p>\n\n\n\n
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<\/a><\/figure>Discover hard money lenders on BiggerPockets<\/h2>\n\n\n\n
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2. Your Experience<\/h2>\n\n\n\n
3. Your Trustworthiness<\/h2>\n\n\n\n
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