Real Estate Funding: What Do You Look for in a Lending Partner?

Question

Trust and speed are huge, but I’m curious what other traits you value most when choosing who to work with.

Corby Goade · Answer

Local is the MOST important, in my opinion. Don't get me wrong, I love a great deal, but I've seen way too many people get burned by amazing quotes and a complete inability to actually close a loan. Those national, discount lenders will disappear when a bigger or easier deal comes along and you'll be left holding the bag.

I want to be able to come to your office if and when there is an issue.

I want to be able to come to your office if and when there is an issue.

Frankie Vozzi · Answer

Absolutely, Melinda trust and speed set the pace, but communication and clarity keep the deal together. The right lending partner should feel like an extension of your team someone who moves fast and keeps you fully in the loop. That’s our focus with every investor we work with: fast execution, full transparency, and zero surprises at the closing table.

Stuart Udis · Answer

Your lending strategy should match your business model. National DSCR and fix-and-flip lenders are fine for simple, box-check deals but that's what they provide. There is not much the loan officers can do to deviate from the highly structured loan terms these programs offer. If your deal and credit profile fits within their approval parameters your loan gets approved.

If you want to scale through development or construction, its important to build relationships with community banks in your target markets. They offer relationship-based lending and tailored loan structures—not one-size-fits-all programs. Equally as important, they have local knowledge and experience which is incredibly important if you take on construction/development deals because **** happens and they are more inclined to understand what the borrower is dealing with and work with the borrower on a solution.

Case in point, I've had national fix and flip lenders fail to comprehend subdivisions and implications on land re-assessments/incorrect tax bills holding up draws. Something a community bank is equipped to handle with ease.  Right now I am dealing with a project where the zoning variances for 18 condos and 12 townhomes conflict with the building code. A major error on the part of the architect. I am in the process of amending the variance to build 15 high end townhomes. I already originated an $8.6M loan through a community bank believing I was going to build the 18 condos as phase 1. I've drawn $2.3M of the loan for a portion of the acquisition. site clearing and preliminary site work/retaining walls.  We ordered a new appraisal and we are in the process of amending the loan to cover the first 8 townhomes and increase the interest reserve due to the interest burn during the redesign period. No panic, just collective problem solving. That's where the value lies.

Another benefit- Its often the community banks that allow borrowing capacity to outgrow  the borrowers balance sheet with patience and consistent performance. With performance comes trust and they are the relationships willing to go out on a limb for you if you have a project with a strong business plan. It's certainly helped me.

Jason Wray · Answer

Coming from a Banker I would tell you that communication, transparency, seasoning, guide line and program knowledge, availability (Not banker hours 9AM to 5PM), reason is customers and realtors need updates from and pre-approvals after hours and over the weekends.

You also want to build a long term relationship with your Banker or Loan officer.  That requires the Bank/Lender to offer multiple programs.  The Banker/Loan officer's job is help each customer build their REI portfolio.  That requires running numbers in advance and being pro-active.

It's important to look into the future which sounds crazy but it's not when you know the rate market forecast, Neighborhood growth (ARV potential), Rents (STR, LTR, MTR).  Buying for cash flow versus Equity turn key or TLC/Ugly inventory.  Having knowledge to which states offer the best purchase to cash flow.

You also want to make sure the Bank/Lender can cover Nationwide in all 50 states and has little to (No overlays).  Turn time is also important to help enhance offers where seller needs to close in less than 30 days!

Real Estate Funding: What Do You Look for in a Lending Partner?

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