What do private lenders and potential partners want to see?

Question

I wasn’t sure if I should post this here or in the BP Marketplace.

I am planning on acquiring my first property, SFH or MultiFam, before June 2015. Ideally I would prefer to do this on my own. However, if I can’t get a conventional or FHA loan I may need to find a private lender or partner. Before I can search for either though, I have to know what informant I need to gather ahead of time. Thus far I assume I will be need to get: an appraisal, asked for price, comps, known issues with property, exit strategy (my aim is buy & hold), and intended rehab if necessary.

What addition information would I need to acquire before going in search of alternative financing.

Brian Burke · Answer

Potential private lenders need to be convinced of two things:

1. That you are likely to successfully execute the plan. Gather up info on what you've done--other real estate successes, business successes, or relevant experience such as construction, finance, etc. anything that tells your story.

2. That there is security for their money. An appraisal or comps showing that there is equity behind them, preliminary title report showing no liens (or ability to obtain title insurance), and data on rehab and costs along with a plan on how those items will be funded. Cash reserves will also help a lot.

Good luck!

Jeff S. · Answer

Mason V. Thinking buy and hold will be problematic for a private lender. Personally wouldn't want to finance an inexperienced landlord.

Lenders like to see skin in the game and equity in a desirable property.

Why couldn't you get a bank loan?

Jay Hinrichs · Answer

Mason V.

if your doing your deal in Oregon and its 1 to 4 units residential the lender will need an NMLS license to do the loan for you unless the Private lender is only doing 2 a year in which case there is a new exemption in Oregon that allows that.

Mason V. · Answer

Whether I can get a bank loan or not depends on the property I go for. All the MFHs are full. One, however, is owner occupied so I would just move into her unit via FHA loan. For the other MFHs I don't have the 20% needed. With the SFHs I do have the 20% needed but not the employment history. Got fired in June and just got hired at a trucking company yesterday. I can't see the home still be on the market in a month or so. For the other SFHs, the sellers either want cash or the home would need work before qualifying for a loan due to water damage.

Mason V. · Answer

Not surprising, Oregon seems to enjoy throwing wrenches into my plans. Lol.

What do private lenders and potential partners want to see?

What do private lenders and potential partners want to see?

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