Get the Right Financing by dealing with the Right Lender. It’s the key to successful real estate financing.
Perhaps you’ve got a conventional mortgage requirement. You are either buying an asset, or refinancing maturing debt. That’s a fairly straightforward request, and you’ll want to keep the following tips in mind:
Finance with a lender active in or knowledgeable about your community.
Your lender knows the local real estate market, and the factors which affect its performance. They understand the forces that drive local demand. They have local representation, or can access local market expertise. You don’t want to have to educate them on the local market dynamics.
Finance with a lender with whom you can build a relationship.
A positive working relationship with your lender, or mortgage broker, is key to a successful financing. Do they “get” you? Do they understand your real estate ownership strategy? Are you able to discuss your plans in a manner that provides you the satisfaction that they are receptive to your needs? Do they appear to understand the local market?
Ensure they are experienced with your asset type.
The right lender will be one that understands your asset type. Certain lenders, for their own good and valid reasons, may prefer one asset class over another. You would be well advised to understand this, and ask the question before you approach them. For example, don’t try to finance your self-storage development, or Hotel property, with a lender unfamiliar or uncomfortable lending into this industry segment. That’s a huge waste of time, and likely will not end well.
Finance with a lender offering competitive Rates.
If you are not able to track rates, or current market conditions, consider hiring a knowledgeable commercial mortgage broker. They can certainly assist you in identifying a lender offering competitive rates. Understand your lender’s rate structure, how they price their funds, and whether it compares favorably with generally available market rates.
Make sure they offer flexible terms and conditions.
Are they offering terms suitable to your particular needs? In particular, is the length of term, amortization period, loan amount, interest rates and repayment (e.g. fixed or floating), to your satisfaction? Are there onerous pre-funding conditions? Are there previously unforeseen requirements, which may range from costly annual review charges, to personal covenant requirements, or the necessity for keeping a lease-rollover escrow account? Any one of these items may be entirely appropriate in the lender’s view, for your particularly circumstance. However if they were unanticipated, they may be difficult to comply with.
Getting the right financing is the key to your real estate investment success, and finding the Right Financing is all about finding the right lender.