What matters most in your lender?

Question

How do you choose your lender?

Terms?  Pricing? Speed?  Ease of process? Availability?

What matters most?

Account Closed · Answer

@Jarod Dudley

Terms for buy and hold, speed for fix N flips, and inhouse underwriting for commercial/MF space.

Mike Dymski · Answer

This one is easy.  Lenders are our partners and we need TRUST (certainty, confidence, protection, reliance).  This is particularly important during economic downturns.

Lee Ripma · Answer

@Jarod Dudley

Closing on time and understanding their own internal underwriting process. Being on top of whatever is needed for an on time close, when they don’t close on time it can put the investor in a really bad spot.

Michael Ablan · Answer

@Jarod Dudley  -  Getting a loan to the finish line when they promise you that they can (after they've reviewed everything)

Jeff Cichocki · Answer

@Jarod Dudley, all of the above. A borrower shouldn't have to pick. They should be able to get fair terms, fair pricing, an easy process and great communication every time.

But do they? Unfortunately not.

Sometimes there are other borrowers who are not easy to work with and consume too much time from the lender which effects their ability to properly support other clients.

Sometimes, the borrowers deal is not that good and doesn't warrant a ton of time. Unfortunately, all borrowers seem to think they have the deal of the century in front of them. When it's not a good deal, the lender should be up front about it and let them know that, why it's not and how the investor could make it better so that it will work.

I've written this before in other post responses, but it bears repeating...

There are 2 and only 2 critical things to every deal out there...

1. Is it a good deal? I mean really? Why? The borrower needs to be able to justify it to the lender. If the borrower can't justify it in detail, it's probably not a deal. I've never had a borrower come to me and say "Man, I can't wait to lose money on this deal!". Yet, they get so excited about getting a deal, that what they present will lose them money. A good lender should be looking out for the borrower and working to help them succeed so that they become a repeat borrower. We all make more money when we work together and help each other.

2. Is the borrower experienced? How experienced? Are they capable of completing the deal on time and on budget? If not, do they have a partner or are they open to taking on a partner to fill the gap? Does the lender have a network of other investors that they would trust to partner with someone who needs the help?

There's obviously more to a deal than just these two things, but if the borrower can't get through these two, to me, the rest of the details are irrelevant and a waste of time to dig into. I apologize if that seems harsh. But borrowers need to think about these two things more than they do. Every deal that hits my desk is a "Great Deal!" per the borrower. Unfortunately, many fail on rule #1 above. A good lender will try to help turn them into good deals; or at least offer suggestions on how to get a better deal next time.

I'll end with this... Borrowers should learn how to be a lender so that they can be a better borrower. If they did, almost every single deal they present would get funded.

Hope this helps someone.

Corey Hawkinson · Answer

@Jarod Dudley If I have to pick 1 of those, I would say pricing. But being 1/8 lower than the others doesn’t matter if the terms are all wrong or the communication is poor, etc.