Find a property or loan first?

6 Replies

Hi, my name is Hans and I am just starting out in the real estate game. I am located in Oakland, CA and I have a question for any experienced investors out there. 

I am interested in starting out with something between a duplex and four-plex and living in one of the units. Having done some looking around, I have found a few in my area. I went to plug them into the BiggerPockets calculator, but I need to know a bunch of information about the loan, closing costs etc. to do the full analysis. 

Should I start off by speaking with a loan processional to see what I can qualify for/what is out there to better understand all the potential fees and costs associated with loans or should I continue to search for deals and get started that way? If so, can anyone make a recommendation on either loan professionals in the Oakland, CA area?

Any ideas you can give me would be much appreciated. Thanks.



The deal is the deal. If there is no deal there is no reason to get a loan. Also the lender will need basic info regarding the house and your plans with the property. You may want to look into no /low money deals. Finally look to get the property for the right price and financing will not be an issue. Try asset based lending.
Welcome to BP Hans Christopher Struzyna You want to start by getting pre qualified for financing. When making an offer on a property, whoever submits the offer on your behalf will submit that pre qual along with the purchase and sale contract. A pre qual makes you a more legit buyer in the eyes of everyone involved. Here in Connecticut it is a given that any offer with a financing contingency will be accompanied by a pre qual

Welcome to BP Hans.

Get the Money before the Deal.

You won't know what your buying power is without getting pre-qualified.  

I agree with Michael Noto.

Good Luck to you!

Hey, @Hans Christopher Struzyna - welcome to BP. I say do both. Continue looking for a good deal and practicing your analytical skills, and simultaneously educate yourself about financing and get a pre-approval lined up. It's a good exercise to go through to talk to banks and learn about the products out there. You can also speak to hard money lenders, as that might be another avenue for purchase; you might buy a property with a hard money loan (or private money) and then refinance into a traditional bank loan. But you won't know which route to take until you've explored the options.

Now, had we been talking about a single family flip, I would have said just find a deal and the money will follow. But that's a different game.

Hi @Hans Christopher Struzyna ,

I live in San Jose, and started out the same way - I bought a fourplex and I still live in it. I'm also looking for deals in Oakland, so I'm familiar with your market. Hard money is a great tool, but it's an expensive option and (because of the high interest rates) it is best used for short term flips, or when a property is so distressed that a normal bank won't touch it.  Since you intend on living in one of the units, it sounds like you're more interested in a buy and hold. I would avoid the hard money (unless you have a great deal that necessitates it), and talk with a mortgage broker to figure out what you can qualify for.

I'd definitely recommend talking with a mortgage broker before you spend a bunch of time looking for deals, because you need to know what you can qualify for first, and then you can look for deals within your price range. If you have a good mortgage broker, they can usually get you a pre-approval within 24-48 hours. Further, if you're working with a real estate agent, no agent is going to submit an offer (in our market) without accompanying the offer with a pre-approval. The both your agent, and the seller, want to know that you're pre-approved for the financing before they'll spend any time working with you.

In my experience, banks have been a nightmare to work with, but a good mortgage broker has been tremendously helpful. Mortgage brokers get paid on commission, so they actually want to help you get the deal done. Bankers collect their salary, and they don't seem to care whether you get the loan or not.

If you don't have a mortgage broker, PM me and I'll give you the contact info for the guy I use in the Bay Area.

Good luck!