What You Need to Know About the Lending Process From A-Z
In this growing industry, there is a lot of information that you can get consumed with. When I am asked by prospects that are looking into getting started into investing in multifamily real estate, I have a few steps:
The process looks like this:
Find an investor group or mentor.
These groups are so important and your team is so important because commercial real estate, specifically multi-family commercial real estate is asset based lending. And because it's asset based lending and, you have no personal recourse, when you sign your name on a loan, the lender is looking for you to be experienced.
Build your team. (Property manager, attorney, mortgage broker, insurance agent, contractor
When you find the property that you like, you're going to need to have a property manager that can provide a good budget for you. An attorney that can write your LOI get you under contract. A mortgage broker that can tell you what type of financing you can provide that specific property. You will also need an insurance agent, that says, Hey, this is where your pricing is coming in for your insurance. If the property manager does not have a contractor, then you're gonna need a contractor preferably someone who can come out and help you with due diligence and assist you with other property needs.
Financing & due diligence (establish a budget, insurance costs, remodel costs and investigate financing terms)
It's time for you to put together a budget.Find out what your insurance costs are gonna be and what your rehab numbers look like. And so that's why it's important to have that team together because you need to know these things before you make an offer on the property.
Check out what your financing terms will look like, because that could kill your deal. It could make your deal greater or kill it.
Make the offer!
Make the offer on the property. What I always tell people is that you have a lot of people out here that are anxious to just get a deal. And they're not really thinking about making investors, their money, and boosting those returns and all of that. And they're just so anxious to get a deal, but you have to underwrite so many deals.
You've gotta have that tenacity to push through and when you do it is so rewarding!