Chicken/Egg Financing ?

1 Reply

I am only a few days away from pulling the trigger on forming a business for our real estate venture. For now, and mostly due to our location and HML unwilling to lend in rural areas, I've decided the next best course of action is to look to banks for financing.

My main question - is it better to just get a loan for the maximum amount I can get with a business pitch and use this as a base line for financing deals, OR is it better to find the deal first and then ask for financing based on numbers?

I feel the second method would be the easiest for acquiring a loan, but the first would be better for being swift with offers and and making the best call for making decisions without having to wonder if you could get financing at all.

What are your feelings/suggestions? Thank you all!

@Tashina Taylor  You should definitely look for financing, find out general terms and whether you will qualify first.  You need to know if you meet the credit criteria, have enough reserves, and have sufficient income (whether you're using your own personal income to qualify, or if the property needs to cash flow a certain amount).  

Knowing the lending criteria will allow you to look for deals that will fit.  Just as an example, maybe you can only finance 75% of purchase price with a 650 credit score, but can go up to 80% with a 700.  (Something like this may come up more with alternative lending options that with a bank.)  That's something you would want to know before looking at property unless you have a substantial amount to invest.