How do you find reputable lenders?

Question

Hello, I’m planning to do my first fix-and-flip early next year, and I’m curious about the best way to properly vet lenders. How do you determine whether one lender is better than another beyond just the terms they offer?
Thank you!

Stuart Udis · Answer

Start with local community banks, most offer construction loans. That will be the most affordable capital with the ability to build meaningful long-term relationships. Critical to your objective will be lenders who are good servicers of construction loans and don't over complicate the draw process with unnecessary delays.

Juan Yepes · Answer

@Joseph Cheley mortgage brokers have access to a wide range of lenders. Partnering with a mortgage broker will allow you to leverage their experience, knowledge and access to lenders/loan products.

Beyond just terms they offer, you'll want a lender who is responsive and helpful. You'll want to make sure it's a lender that will address your needs in a timely manner. We close many deals in your area for investors so we know which lenders can provide the best terms and also the best service. If you'd like to discuss further feel free to DM.

Chase Busick · Answer

I agree with all the others points that they made to you.

@Stuart Udis's post about local lenders will probably be the cheapest option, but a lot like borrowers that have experience doing it.. Some local banks may accept you with at least one (but they have to protect their investments to you), so they may also like seeing all your financials & performance... If you are still working at a W-2 Job or own your own business & pay yourself this will be great to help with financing. Having a coach can also help as you are paying them for their experience & help through the process (not a requirement, but can help show serious especially if the coaches are known locally).

A Commercial Mortgage Broker option may be the next best option as they shop lenders nationwide most of the time in order to provide you with the best terms on fix & flip, or refinancing into 30 year fixed rental loans, portfolio refi's, permanent commercial loans, etc. based on your strategy. I work under & with one. I strategically make the best recommendations to all my clients that may be best for them in their situation (but revolves around this).. Commercial brokers are pricier but we have different options. I'd recommend looking at their experience, fee structure, the ability to hopefully learn from & build a long term relationship (hopefully matches with your values, morals & personality), if they are prudent with their own investments & more in order to ensure the best fit for you long term.

Having great credit can always help you save thousands or more over your lifetime.

As an investor, we want as much compound interest as possible, we should be equally be striving to achieve it in all areas of life... Local relationships with other investors, & building your team of highly successful people (leveraging other people's time, experience, money, knowledge & wisdom) is a very important task to accelerate your growth & to achieve your goals. Along the way it is always best to ensure you reduce risk & hedge as much as possible in your investments, operations & general life..

Consistently Improve Everyday & You Got It!

Frankie Vozzi · Answer

Hey Joseph! congrats on your plans,  A great lender is more than just terms , you want someone who’s funded lots of projects like yours, releases rehab draws quickly, is transparent upfront, and doesn’t change numbers last-minute. I’m with Branch Lending, and we specialize in fix-and-flip loans nationwide even with new flippers, with a very fast, straightforward draw process. If you want, I can walk you through exactly how to vet lenders and show you what a clean, reliable process looks like for your first flip. I sent you a DM let's connect!

Andrew Postell · Answer

@Joseph Cheley it's very nice for @Preston Dean to mention me but I also agree with many of the above posts.  We network locally for these things. This is a super important question and it doesn't just apply to lenders.  How do you know that a contractor is any good?  An electrician?  A title company?  Anything?  Even if they do have 20 years experience...how do you know really?  And while nothing is foolproof the most consistent method of finding good vendors is relying on OTHER real estate investors that have worked with those vendors.  This is why we network with other real estate investors - kind of like what you are doing here!

So, let's try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. The priority is consistent recommendations from active investors.  Oh, eventbrite too.

Certainly reach out if you would like.  Here to help!

Preston Dean · Answer

@Joseph Cheley

REFERRALS!

Example - @Andrew Postell is the lender I would recommend for you. No reason to waste your time looking else where!

Erik Estrada · Answer

@Joseph Cheley

Just look for transparency. A good lender will break everything down for you. A to Z. They will ask you detailed questions to make sure time is not wasted.

Also look for reviews, and licensing. Yes there are some states that do not require a license to originate private money, but you are safer working with one that does have a license.

MLOs with licensing generally have a higher standard for themselves as professionals. They don't take their licensing for granted.

Stacy Raskin · Answer

Read reviews and it's helpful if they are licensed by the NMLS because it's a difficult test that many people fail. An NMLS license isn't necessary generally to do fix and flip loans but it's helpful to work with someone who is knowledgeable, has integrity, takes the work seriously and is experienced in mortgages. Having at least one license shows the person passed the federal NMLS test and depending on the state passed a background check and/or credit check. Having more than one license is when someone is willing to pay fees in multiple states. if someone is licensed in at least one state it would be helpful to know.

Mike Grudzien · Answer

Do you ever network LOCALLY, in real life, in person, form local trust relationships and get personal recommendations and referrals?Find a local REIA group, a local Facebook group.

How do you find reputable lenders?

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