What are lenders looking for?

[Nicholas Bybee]

Hi everyone. Just starting in the business and before I find a great deal and blindly stumble into a lenders office, what are the things that private, hard money, and transactional lenders are looking to see in a deal and a borrower? Thanks

[Alex Bekeza]

Lenders all have minor differences within their guidelines and criteria in order to compete with one another.  But Davian has a point, they want to know that the mortgage is going to get paid and in the even that it doesn't get paid that at least they will be able to recoup a property which will earn them their money back.  

In general, lenders want to see

-Skin in the game

-Ability to repay the loan

Tips:

Be able to provide as much detail about the deal as you can (budget, property history, rent roll, future performance, etc)

Be able to highlight your strengths as a borrower even if you don't have a lot of experience

Although Davian, I would advise against taking a loan from anyone who doesn't check your credit.  Many HMLS and commercial lenders are very lenient with credit and some even have no minimum score requirement.  However, put yourself in the lender's shoes.  What sense does it make to not examine the borrowers history of repaying his debts?