Where do I start?

Question

Hi everyone!

My husband and I want to buy our first real estate asset as an investment.

We have the capital but would like to take a mortgage. Our credit score is good, but how do we even start?

Do I start calling all the different banks to get an offer? Or should I be using a mortgage broker?

We live in NYC but looking at properties outside New York. Do I need to come to a meeting with a particular asset in mind, or can I just get the term+ pre qualifications if I have an area, type of asset and budget in mind?

Thanks!

Todd Kime · Answer

What state are you looking at purchasing in?

As another person mentioned,  if you can talk with an experience Mortgage loan officer.  That will help allot.

Ecaterina Katerina Morosan · Answer

They'll be factored into your closing costs so loan origination fees related to the loan are on buyer upon closing. Sometimes, depending on the deal, you can finance the closing costs or get credit from seller. Again, depends on the market and the deal itself.

J Castro · Answer

Great question - It's exciting to hear of others finding their way into real estate investment! You can either use conventional banks or private money lenders.

A private money lender is an individual or organization that provides loans outside of the traditional banking system. They are commonly used by real estate investors to finance projects like buying, renovating, and flipping properties.

Here's a breakdown of what you should know about private money lenders:
How they differ from traditional lenders

• Faster Approval: Private lenders can approve and fund loans within days, which can be crucial in competitive markets.
• Flexible Terms: They offer more customizable loan terms, including repayment schedules and interest rates, compared to traditional banks.
• Less Stringent Requirements: Private lenders often prioritize the value of the collateral (usually the property) over the borrower's credit score, making them accessible to those who might not qualify for traditional financing.
• Higher Interest Rates: To compensate for the increased risk they undertake, private lenders typically charge higher interest rates, often ranging from 6% to 15% or more.
• Shorter Terms: Fix & Flip loans generally have shorter repayment periods, typically ranging from 6 months to 24 months. Long Terms: Rental/DSCR loans generally have longer repayment periods, typically ranging 15 years, 30 years or 40 years.

Pros of using private money lenders

• Quick Access to Funds: Ideal for time-sensitive deals, allowing investors to seize opportunities swiftly.
• Flexible Lending Criteria: Accessible to borrowers with less-than-perfect credit or unconventional income sources.
• Focus on Property Value: Lending decisions are heavily based on the potential value of the property, not just the borrower's financial history.
• Potential for Customized Solutions: Negotiable loan terms and creative financing options can be tailored to the borrower's needs.

Cons of using private money lenders

• Higher Interest Rates:  Can lead to higher overall repayment costs compared to traditional loans.
• Less Regulation: The private lending market has fewer regulations than traditional banking, potentially leading to less transparency and higher risk for borrowers.
• Variable Loan Terms: Terms can differ significantly between lenders, requiring careful evaluation to avoid unexpected costs.

Selecting the right lender

• Assess Lender Credibility: Check their experience, reputation, and licensing (if applicable).
• Compare Loan Terms: Evaluate interest rates, loan duration, and associated fees.
• Ensure Transparency: Look for lenders who provide clear documentation and explanations of their terms and fees.

In conclusion, private money lenders offer a valuable financing alternative for real estate investors, particularly when speed and flexibility are crucial. However, borrowers should be aware of the higher interest costs and the option of doing short term or long term loan, based on the type of funding required for your investment property. Thorough research, careful evaluation of they type of loan best fit for your investment (fix & Flip loan or rental loan), and a clear understanding of the loan agreement are essential for a successful transaction.

Tamar Levin · Answer

Thanks everyone! Can someone explain how the broker fees work? Are they usually covered by the lender or the buyer?

Mohammed Rahman · Answer

Hey, great question and exciting that you’re getting into your first investment! So, here’s the deal—don’t waste your time calling every bank. Start with a mortgage broker.

They’ll shop around for you with multiple lenders and save you time (and probably get you better rates or terms than if you just walked into a bank).

You don’t need to have a specific property yet. You can absolutely get a pre-qualification or even a pre-approval based on your credit, income, and target purchase price.

That way, when you do find a property, you’re ready to go and sellers take you more seriously.

Since you’re in NYC but looking outside, a broker who knows those markets (or at least has access to national lenders) will be super helpful.

They can also guide you on things like investment property requirements—like the higher down payments and slightly higher interest rates compared to primary residences.

Biggest tip: start with pre-approval so you know your buying power, and it makes everything smoother when you’re ready to offer.

Leo Leiva · Answer

Hi Tamar,

Just like others have said, finding a private lender—or better yet, a broker who works with private lenders—is your best move.

Think of it like buying a car. You’ve got rebates, inflated extras, and coverages that mostly pad the dealer’s profit. But if you work with someone who can negotiate on your behalf and act as your fiduciary, you cut through all the noise.

A good broker doesn’t just find you a loan—they help structure the right loan for your goals, whether that’s maximizing leverage, minimizing paperwork, or closing fast. It’s the difference between buying off the lot or custom-ordering exactly what fits your needs.

Hope this helps!

Brandon Croucier · Answer

A Mortgage broker is going to save you a plethora of hours and thousands of dollars.

Mortgage brokers know this market inside & out, Happy to connect!

Frank Pyle · Answer

Great questions, and you’re already ahead by thinking through the financing first. A mortgage broker can save you a lot of time by shopping multiple lenders for you, especially if you're buying outside of NY. You don’t need a specific property yet—many lenders can issue a pre-approval based on your goals, budget, and target market. Feel free to DM me if you’d like help getting started or want to compare options.

Deborah Wodell · Answer

Hey Tamar! You’re in a great spot to get started. Since you already have an idea of your area, budget, and asset type, you can definitely ask for terms and pre-approval even without a specific property yet. It doesn’t have to be through a broker ONLY—though they can be helpful—there’s nothing wrong with also reaching out directly to a few banks or lenders just to compare and see who feels like the right fit.

James McGovern · Answer

Have you looked into the Connecticut market?

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