How to Finance Investment Property with Commercial Loans
How to Finance Investment Property with Commercial Loans – Even Residential
What type of financing will work best as you scale a portfolio? Remember, real estate investing fundamentals use leverage and OPM (Other People’s Money).
Learn all about commercial financing, what it’s used for and how to structure deals with smart money lending. My guest is Brandon Plombon, Assistant VP, Business Banker at Pioneer Bank. I interview him and he provides training on the fundamentals of commercial financing, how to use it and the differences between commercial and residential loans. Click here to watch now. Together, we cover:
– How commercial loans work
– Underwriting – lending criteria
– Commercial loans for residential
– Accelerated access to capital
COMMUNITY BANKS VS. INSTITUTIONAL LENDING
Did you know that If you’re hunting for a bank loan for your real estate investing, think BIG…but focus on real estate friendly, smaller community banks.
Community banks or credit unions are often more interested than mega-banks in lending to borrowers committed to improving regional properties. The smaller organizations are typically connected to the communities where they’re located and stand to gain when those communities are enhanced.
The big banks care mostly about how your business loan – large or small – fits their mold. Community banks have more flexibility, and the borrower has greater access to the people who make the decisions.
As you build a personal relationship with a banker, there might be room for more negotiation on the terms of a loan. An investor who’s done their research and presents an informed plan for the requested loan is more likely to succeed. This includes easy to understand financial information, full complete property details, your strategy for the investment and background details on your experience, especially if you hold a portfolio.
And, the real estate investor who gets that loan and follows through on their loan application proposal will be much more likely to have a true lending partner for future capital.
Local lenders have contact with regional community development folks and can be a great referral source for learning more about what’s going on with the local economy – While these are important relationships to cultivate, don’t think of community banks as equity partners. They are looking at your loan application from a risk perspective just as any lender would.
Making safe lending decisions is key to the bank’s business, so don’t assume they will care too much about your investing goals. Think instead about your proposal from their view. Ask the lenders what you need to do to get their financing and be a good candidate for their goals in lending and accelerated access to capital. That’s what it takes to be a smart investor.
Comments