Presenting deal to a lender?

Question

I realize that the answer to this question may be too lengthy to write as a response here, but I sure could use some advice.  
Question.... When I find what I believe is a good deal and I want to act on it, how do I present it to a potential private lender?  I want to make sure I do any due diligence and provide all the info I can to make it look good to the lender and I want to present it completely and professionally.  What are some of your suggestions on how to go about taking a deal and "packaging it" correctly to present to the lender?

Peter Giardini · Answer

Jeff, some of the other posts offer great insight.

Since you appear to be challenged in at least two of the three areas lenders look at... starting out as a wholesaler may be the best way to go.

With that being said, and drilling down further with what Eddie mentioned... becoming an expert in an area or neighborhood, fully understanding what is influencing the market and where the profits are, will put you in a position to discuss real estate investing with those within your immediate circle and perhaps you could find someone who will be willing to stand up finanically for your deal(s)... as the money partner.

Best of luck!

Eddie Ziv · Answer

You mentioned that the lender is a private lender. A "Private lender" encompass a wide range and types of lender from your grandma to a business partner or someone whom you met at the gym. All that depends on who those people are, the level of comfort they have doing business with you and how much they know you. Their response to you may also  range from:"Look Jeff, I know you for years, when you have the right deal, you'll get the money no problem" to " Sorry, Jeff. I like you but I don't make private loans..."
It is also hard to advice you since the goal of your deal is not clear. Are you a buy-n-hold investor or just looking  to rehab and flip? 
If you buy and hold, the best is to find out from a PM, the realistic rent in the area (Potential income), vacancies percentage, length of vacancies, etc.

If you are a flipper, find out the current real estate market value (As oppose to tax assessments, five years ago prices, etc) in the target area. What is the average time it takes to sell a property in area, who are the buyers (First timers, established home buyers, other investors, etc)

All that info, would make your private lender feel confident that you did your homework and know your stuff.

Good luck,

Jason S. · Answer

It is admirable that you wish to jump in - are you confident that you can identify a deal?  You are starting correctly by asking at this forum - there is a wealth of information to be found.

You asked about presenting the deal to the lender - the first question to ask is what is the criteria for lending from your prospective lender.  If you are to approach a lender to borrow then you want to know there basic criteria in order to know if your deal "fits".  Different lenders have different ways at looking at a deal - but most are going to want you to have some money.

Have you considered wholesaling or bird dogging for investors in order to learn not only to be certain of how to identify a deal but also to make some money - and then take this earned money putting deals together to strengthen your case to your lender - showing both the ability to identify a deal as well as have some of your own money to put "on the line" also?

Peter Giardini · Answer

Jeff,

Remeber that lenders will be looking at three thing when they look at your deal...

You financially, the deal itself, and your eperience with that type of deal.

Before you approach any lender with a deal you should already have discussed with lender what you and your business are all about.

More details can be obtained by going to my Bigger Pockets blog and in the lower right hand corner is a link to a bankers report that will guide you through presenting to a lender.

No sales... just a very specific approach to presenting to a lender.

Best of luck.

Jeff Linder · Answer

Peter, Thanks for taking the time to write that.  I appreciate it.  So, if they are looking at the deal, my experience and my financial health.....and I haven't done a deal yet, and my personal financial picture is bad...how do I start?  That seems to be my biggest, if not one and only, hurdle in trying to find funding.  I can paint a picture of myself with a website, a "flyer" of sorts, explaining who I am and why someone would lend with me, etc etc.  But in reality, I am a novice looking for my first deal with no money or credit.