Newbie !!! Should i find the deal or lenders first ?

Question

I have a realtor that sends me listing about every other day, i working on building my credit and my capital at the moment. In the meantime I’m using a lot of my time reading books, listening to BP podcasts, and analyzing deals.

My goal is to find a duplex, triplex, or quad-plex to house hack/ BRRRR my way into saving capital and just to get my feet wet with my first property.

MY QUESTION.......

If i come across a deal and the numbers seem to work out, should i make an offer even tho i may not have the money ?

And knowing i may not qualify for a loan to pay.....

Should i pass on the deal ?

Because i know from reading and listening to podcasts tying up deals with no intention to buy is not Good impression to have going in to this business!

Marcus Auerbach · Answer

An offer without a rock solid pre-approval letter or proof of funds does not go anywhere in my area. Your agent must be a newbie. First job is to get a client hooked up witha  great lender and get him pre-approved. To start out you can do a house hack with a 3.5% down FHA loan, so it should not take you too long to save that up!

Jonathan Oh · Answer

@Richard Gray III Nothing is stopping you from getting pre-qualified while you do you look at deals. You should know what you can qualify for, otherwise, you're just wasting your time. And when you do find that property you really like, chances are there are 10 other investors going after it. If there's a pre-qualified investor that offers a similar price as you, why would seller want to go with you if you can't guarantee that you have the funds? Have the financing in place so you can pull the trigger quick.

Taylor Hudgins · Answer

Hi Richard,

I recently purchased my very first rental last month.  My real estate agent was a HUGE help and she steered me to grab a pre-approval letter from a local bank first.  I had to talk to 2 - 3 that asked me to complete an application, sign off for them to check my credit score, etc.   The lender then pre-approved me for a general amount that he would lend over for our investment property.

We then submitted that pre-approval letter with every single one of my offers that we put in (we're in a hot market so we put in about 5 offers before landing on one that actually accepted).

Your offer will seem much more substantial with a pre-approval letter; especially if you're going up against other offers.

Ken Maddis · Answer

Assuming you get a deal accepted, you're gonna be putting down some earnest money. If you don't get approved for the loan and can't close the  deal, say good bye to that money.

Get a pre-qualified letter from a lender, know what kind of rates and terms you qualify for, and if those work for you, then start putting in some serious offers.

Newbie !!! Should i find the deal or lenders first ?

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