All Forum Posts by: Garry Miller

Here's my thoughts:

• Loan Type & Terms – Does the lender offer competitive rates and terms that fit your investment strategy? I would think most do not have a specific strategy other than make money.  That's part of the issue.  Most times when a deal is brought in, the numbers do not even work or the borrower does not have the credit.  A good portion of the time remaining, the numbers are not real.  With a simple search I see the ARV they think they're getting is a joke and it is clear they do not know what they are doing.  When it comes to bridge loans, I'd say don't be so rate sensitive at the start.  It is what it is.  But once you are 5+ you will be sub 11% everywhere, maybe sub 10%.  As far as loan type.  Lots of lenders do 1 - 4 family houses.  The decision for these lenders at the start of your career are not about rate and points, it's about who will do a 0 and what is the leverage.  If anything, I'd want someone over my shoulder, underwriting the deal, and if I am off, tell me. 
• Speed & Reliability – Do they actually close on time, or do they create last-minute headaches?  The Closing process is huge, being good at it that is.  There's a few moving parts to it and sometimes the hold up can be: The Seller, Title Company, Legal, lots of things other than lender or broker.  Some Lenders do have better closing teams than others.  I do not want to name names or throw digs but I have had nightmare closings b/c someone in Legal missed something or the coordinator drops the ball.  If you are working with a Broker, he has to me communicative and also you have to know the loan is going through the stages: Application - Processing - Underwriting - Committee - CTC. You should know where your loan is at all times, or your broker should.  Sometimes it's the borrower holding things up.  Some aren't so great with forms and docs.  So it goes both ways.
• Reputation & Reviews – How do you verify a lender or broker’s credibility? What red flags do you look for? As far as credibility goes, if you are dealing in the 1 - 4 family bucket, you shouldn't be taken at all.  There's lots of big box national lenders.  Not saying they're all "good" or "fast" they all have their share of their bad reviews.  I'll hear all the time how some new client of mine "hates" some lender that I actually have a good rep with so, it's really all up to the loan officer at the lender.  Are they on top of your loan?  They fighting for you?  Are they reporting back on your loan?  Are things moving fast or are you waiting weeks and weeks?  Someone may love Lender ABC and someone may hate them.  I'll bet those two have different loan officers.  Again, it all depends on them because what if you found a new loan officer who doesn't know what they are doing?  What if you found some loan officer who isn't looking for one-offs, he's looking for the 5+ guys each year and he puts you to the back burner.  I like to be fair, honest, and responsive.  I owe my clients at least that much for the commission.
• Fees & Hidden Costs – Have you ever encountered unexpected fees or unclear terms? How do you avoid them?  Yes, sadly, this happens.  I can tell you a story of a Canadian Investor of mine that I lined up a fix n flip deal for in the Philly market.  I got him terms for 70% on purchase.  After UW it was trimmed to 65%, and then a day before the close they went down to 60% because they didn't like the state of the market at the time.  Turns out they were right, the house sold for 35% off it's bridge loan ARV.  They should be no hidden fees from a lender.  There is Origination and then some kind of service fee that will encompass legal, processing, underwriting, etc.  There are hidden fees at closing in terms of settlement though, transfer tax, school taxes, there's doc charges and fees from the title company.  Charge for holding the escrow.  Lots of things you do not expect and they actually add to the cost of the deal and that's why it is really. really hard to find a sub 70% ARV project cost when you add it all up.
• Communication & Support – Are they responsive and transparent, or do they disappear when issues come up? I been through some hairy situations, as hard as it is you can't flake.  Not if you care about your character.  I've come out of my own pocket to help client's rehab jobs that were stalled.  I've kicked back commission.  I take calls on the weekends and nights.  I advise, consult, help set-up.  You have to make yourself useful.