Real Estate Agent · Honolulu, HI · Member since 2019 · 22 posts · 1 vote
So I was wondering... if the numbers work for an investment property that is on the market, do you guys go ahead and make an offer before having all the financing for the deal finalized?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
6y
In the investment world and with rehab flip projects, I often make offers prior to having my financing “locked in”, however, an important distinction here is that I have a large private investor network I have built over the years with $10M+ available to me so I know that when I have a deal, the money is there, just not officially approved yet.
If you are new, don’t have that kind of capital in the background, then you would be taking a risk entering escrow without your funding in place. You can always get a quick approval for a hard money loan but you will need capital in your bank to cover down payment, closing costs, perhaps rehab costs (some lenders will lend rehab funds too), and carrying costs like taxes, insurance, utilities, and interest payments.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Laren Eustace you cannot get financing until the specifics of a deal are available. Ity is a little bit of a catch 22.
Generally the best approach is to talk to all sorts of lenders to find out what programs they offer and what qualifications are needed. Once you are confident you can get financing then you make offers.
These initial offers should always be contingent on financing. Many lenders will imply they can loan to you but at the last minute an additional requirement comes up that you don't' meet and the deal is killed.
You need to understand a key point. Loans for homeowners are dramatically different than loans for investment property. Loans for property held in an LLC are dramatically different than investment loans for properties held in your own name.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
6y
In the investment world and with rehab flip projects, I often make offers prior to having my financing “locked in”, however, an important distinction here is that I have a large private investor network I have built over the years with $10M+ available to me so I know that when I have a deal, the money is there, just not officially approved yet.
If you are new, don’t have that kind of capital in the background, then you would be taking a risk entering escrow without your funding in place. You can always get a quick approval for a hard money loan but you will need capital in your bank to cover down payment, closing costs, perhaps rehab costs (some lenders will lend rehab funds too), and carrying costs like taxes, insurance, utilities, and interest payments.