Arrange Financing Before Making Offers

When you make an offer, sellers expect you to provide details about how you plan to actually pay for their property. Which means you need to line up financing before you start throwing around offers. Your options vary based on whether you’re looking for a short-term purchase-rehab loan or a long-term rental property mortgage.

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For short-term purchase-rehab loans, go with a hard money lender. They’re fast and flexible, if expensive. Alternatively, you may find luck with a local community bank, but these operate individually, and each has a different lending policy.

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For long-term rental mortgages, you can try conventional mortgage lenders when you first start investing. But banks and conforming lenders are not scalable beyond your first couple of properties as they place limits on how many mortgages you can have reporting on your credit.

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Consider portfolio lenders as “next-level” financing. These lenders don’t sell your loan to a large, corporate lender, but rather keep it in-house. Local community banks sometimes offer these loans, as do some online lenders.

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Eventually, once you’ve proven a track record of success, you can borrow money privately from friends and family to fund your deals. But that comes years after your first deal.