Private Lending & Conventional Mortgage Advice

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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
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Are realtors likely to help new investors seek out private loans?

Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
Posted Oct 8 2022, 12:02

I am looking to expand my rental property portfolio.  I would like to use the help of private lenders to do this.

Is it common in the industry for realtors to help you find a private lender?  Or is this something investors are expected to do themselves and bring to the table even before they begin?

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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
Replied Oct 10 2022, 14:46
Quote from @Jordan Woolf:

@Sam Bhattacharya I was discussing finding a private lender with my agent and come to find out she was looking to become a private lender.


Come to think of it, why can't your real estate agent BE your private lender if they have the funds?

Anyway, I've gotten a lot of good advice and help from a lot people in this thread.  Thank you for that.

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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
Replied Oct 10 2022, 14:48

I intend to have an attorney or title company prepare the note or deed of trust for the private loan.

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Garrett Crosby
  • Real Estate Agent
  • Los Angeles, United States
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Garrett Crosby
  • Real Estate Agent
  • Los Angeles, United States
Replied Oct 10 2022, 14:55

Depends on the realtor. I can tell you for certain that I do everything I can to help my clients get the financing they need to be successful here in CA. It's a team effort. Unfortunately, lack of experience is usually the most notable piece that stops realtors from helping more. Some simply don't have the relationships or expertise to work with investors to get them the financial options they need to be successful. 

If you are ever around LA, I would be happy to help you out! :) Feel free to reach out if you have any other questions!

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Replied Oct 10 2022, 21:34

@Sam Bhattacharya Yes. Realtors work with lenders and will know who or find out with who to connect you with. Realtors work with lenders on every transaction requiring financing. If you stick with your realtor, it is their duty to get you everything you connected to resources you need to close on your investment.

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Marcus Auerbach#3 Investor Psychology Contributor
  • Investor and Real Estate Agent
  • Milwaukee - Mequon, WI
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Marcus Auerbach#3 Investor Psychology Contributor
  • Investor and Real Estate Agent
  • Milwaukee - Mequon, WI
Replied Oct 11 2022, 05:49
Quote from @Maksu Ize:

Realtors care about their commission, not getting you a lender

Once they have their commission, they care about getting another commission by getting you to use "their" lender


They should, because you need a lender first, before they can have their commission. Working for "one commission" is also incredible shortsighted, especially when working with investors agent's should have a vested interest in their clients continued success. 

But not every agents get's that, so I am sure you have seen what you describe...   

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Marcus Auerbach#3 Investor Psychology Contributor
  • Investor and Real Estate Agent
  • Milwaukee - Mequon, WI
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Marcus Auerbach#3 Investor Psychology Contributor
  • Investor and Real Estate Agent
  • Milwaukee - Mequon, WI
Replied Oct 11 2022, 05:53
Quote from @Sam Bhattacharya:

I am looking to expand my rental property portfolio.  I would like to use the help of private lenders to do this.

Is it common in the industry for realtors to help you find a private lender?  Or is this something investors are expected to do themselves and bring to the table even before they begin?


In theory yes. But out of 400 agents in my office, I am pretty sure 90% doesn't know what an HML is, and the ones who do, 90% have never been involved in one. So unless you find a unicorn agent/investor who happens to have personal experience, you probably have to do that part on your own. BTW - BP has an entire section dedicated to HML, just look on top!

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Alex Breshears
  • Lender
  • Hampton Roads, VA
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Alex Breshears
  • Lender
  • Hampton Roads, VA
Replied Oct 11 2022, 06:42

Hi Sam! 

As a private lender (in my definition I lend out my own capital), I can say I haven't had a single referral from an agent in my area. They usually don't even know private lending exists, much less know to look for people doing it.  The ones who do are likely to keep the lender to themselves because they are also investing in the area. So I wouldn't wait for an agent to cough up a lender, especially if you want truly private capital to buy properties.

Now hard money lenders are using the term private lender now, which is both good and bad. In my world as a private lender, the experience is VERY different from a hard money lender. For example, I don't pull credit reports, I have the flexibility to do creative financing options, defer interest only payments, etc etc.  Hard money lenders have capital all the time, and this liquidity comes with strings attached. They have to lend in their certain box because the capital they are using is not their own. The source of the capital dictates what that loan and underwriting guidelines look like.

With that being said, I would suggest finding a few lenders you want to work with, either private or hard money lenders, and really understand the programs and their guidelines. Realize the rates are likely to change unless you lock something in very soon. It's just the nature of the economic cycle we are in right now. If you know the financing options you have available to you, then you will be able to analyze deals with real world numbers for financing.

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Stephanie P.#4 Multi-Family and Apartment Investing Contributor
  • Washington, DC Mortgage Lender/Broker
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Stephanie P.#4 Multi-Family and Apartment Investing Contributor
  • Washington, DC Mortgage Lender/Broker
Replied Oct 11 2022, 12:00
Quote from @Sam Bhattacharya:

I am looking to expand my rental property portfolio.  I would like to use the help of private lenders to do this.

Is it common in the industry for realtors to help you find a private lender?  Or is this something investors are expected to do themselves and bring to the table even before they begin?


 Usually it's the other way around.  If a private lender or portfolio lender comes across a well qualified borrower, they'll introduce them to a Realtor that they have closed loans with to see if they have anything suitable for their borrower. 

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Eric Reed Gustavsen
  • Real Estate Agent
  • Howard County, MD
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Eric Reed Gustavsen
  • Real Estate Agent
  • Howard County, MD
Replied Oct 12 2022, 03:36
Quote from @Maksu Ize:

Realtors care about their commission, not getting you a lender

Once they have their commission, they care about getting another commission by getting you to use "their" lender


This is a very distasteful comment and an untrue generalization. It's unfortunate you have experienced the worst in real estate it seems.

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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
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Sam Bhattacharya
  • Rental Property Investor
  • Damascus, MD
Replied Oct 13 2022, 14:37
Quote from @Dave Skow:

@Sam Bhattacharya-  you  will want to  get your  financing  sources  in place and  lined  up   BEFORE  locating  a property ......what are the reasons  private  financing is needed ?


 I am trying to see how creative I can be using OPM to buy and rehab rental properties.  It seems like it can be lucrative if you do it right.

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Dave Skow
  • Lender
  • Seattle, WA
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Dave Skow
  • Lender
  • Seattle, WA
Replied Oct 13 2022, 14:45

@Sam Bhattacharya-  thanks ....good  luck 

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Helen Mastanduno
  • Denville, NJ
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Helen Mastanduno
  • Denville, NJ
Replied Oct 13 2022, 21:24
Quote from @Alex Breshears:

Hi Sam! 

As a private lender (in my definition I lend out my own capital), I can say I haven't had a single referral from an agent in my area. They usually don't even know private lending exists, much less know to look for people doing it.  The ones who do are likely to keep the lender to themselves because they are also investing in the area. So I wouldn't wait for an agent to cough up a lender, especially if you want truly private capital to buy properties.

Now hard money lenders are using the term private lender now, which is both good and bad. In my world as a private lender, the experience is VERY different from a hard money lender. For example, I don't pull credit reports, I have the flexibility to do creative financing options, defer interest only payments, etc etc.  Hard money lenders have capital all the time, and this liquidity comes with strings attached. They have to lend in their certain box because the capital they are using is not their own. The source of the capital dictates what that loan and underwriting guidelines look like.

With that being said, I would suggest finding a few lenders you want to work with, either private or hard money lenders, and really understand the programs and their guidelines. Realize the rates are likely to change unless you lock something in very soon. It's just the nature of the economic cycle we are in right now. If you know the financing options you have available to you, then you will be able to analyze deals with real world numbers for financing.

Hi Alex,

I am wondering if I can connect with you.

Thank you,
Helen

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Alex Breshears
  • Lender
  • Hampton Roads, VA
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Alex Breshears
  • Lender
  • Hampton Roads, VA
Replied Oct 14 2022, 15:12
Quote from @Helen Mastanduno:
Quote from @Alex Breshears:

Hi Sam! 

As a private lender (in my definition I lend out my own capital), I can say I haven't had a single referral from an agent in my area. They usually don't even know private lending exists, much less know to look for people doing it.  The ones who do are likely to keep the lender to themselves because they are also investing in the area. So I wouldn't wait for an agent to cough up a lender, especially if you want truly private capital to buy properties.

Now hard money lenders are using the term private lender now, which is both good and bad. In my world as a private lender, the experience is VERY different from a hard money lender. For example, I don't pull credit reports, I have the flexibility to do creative financing options, defer interest only payments, etc etc.  Hard money lenders have capital all the time, and this liquidity comes with strings attached. They have to lend in their certain box because the capital they are using is not their own. The source of the capital dictates what that loan and underwriting guidelines look like.

With that being said, I would suggest finding a few lenders you want to work with, either private or hard money lenders, and really understand the programs and their guidelines. Realize the rates are likely to change unless you lock something in very soon. It's just the nature of the economic cycle we are in right now. If you know the financing options you have available to you, then you will be able to analyze deals with real world numbers for financing.

Hi Alex,

I am wondering if I can connect with you.

Thank you,
Helen

 Sure Helen! Happy to help! You can post a question here or send me a message.

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Stephanie Medellin
  • Mortgage Broker
  • California
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Stephanie Medellin
  • Mortgage Broker
  • California
Replied Oct 14 2022, 15:50

It's really not common for a Realtor to have multiple private money lenders available to refer.  When I think of private money, it's going to be a family member or friend that has money to lend, not someone who advertises or lends as a business

  Realtors may know of hard money lenders, or mortgage brokers with sources for non-conventional lending if you or the property cannot qualify for a conventional loan.