The Lender Checklist: Finding a Solid Real Estate Investment
Finding the right real estate investment as a lender is about more than the property; you need to perform due diligence on both the property and the borrower.last updated Wednesday, May 17, 2023
#Real Estate Investment #Property Qualification
| John Burson | Subscribe |
CONTENTS
Every lender aspires to create mutually beneficial relationships, which requires time to understand the property business. The due diligence process involves both parties; as a lender, you should follow a checklist before giving a stamp of approval to any project, which includes:
Property Qualification
Every property you look into will have a plethora of data available to help you in your decision-making, which is only valid when correctly interpreted.
A Property Search
Use multiple listing services (MLS) to help get more information on the property, such as its sale history, time in the market, lot size, neighboring amenities, and physical description. The MLS can also give you access to data on the neighborhood's crime history, current issues, and problems.
CMA Result Analysis
Once you have your data, you can create a comparative market analysis (CMA) to help you conduct a comparative sales statistics analysis for similar properties in the area, giving you an estimate of the amount of time the property will spend on the market.
Analysis of Existing Liens
Tax and related public records are crucial to your property search. Some properties come with complex taxes and issues, which you are better off discovering before committing.
Estate Regulations
Several regulations govern the changes you can make on a property, especially in more urban zones. Always ensure your borrower knows and abides by these regulations, including additional homeowner's associations' rules such as material selection and paint color.
Physical Inspection
As a lender, a physical inspection of the property is quite helpful. While pictures on the MLS look flattering, they don't always give a full shot of the property. A physical inspection helps you get an authentic feel of the surroundings, and you can check CMA data firsthand.
Third-Party Appraisal
While an independent appraisal may mean additional costs, it assures you that price estimates are thorough and inclusive of all costs. If cost is a factor, you can go for the BPO (broker price opinion), but you will not get as much detail as you need.
Borrower Qualification
Trust between a lender and a borrower is essential. It would be best if you cared for the creditworthiness of your client as much as you do about the property. Some of the characteristics you may want to consider are:
- Your borrower's ability to respond to your requests and questions quickly. The borrower must understand and respect your interest in the deal.
- The borrower should present you with a realistic and concrete plan for improvements, which gives you confidence in their ability to understand the scope of work needed to make the sale successful.
- Always check your borrower's history with private money loans, liens, foreclosures, and bankruptcies. You need to know what you are walking into upfront.
- A borrower's references from other partners and lenders may give you insight to help you decide. Other considerations might include the property tenants or owners.
- Building a face-to-face relationship with your borrower is very important to help you find someone you can trust. Your gut feeling will always guide you to the right decision.
The best way to grow and thrive as a
Subscribe to Paperfree Magazine
EB5 visa Consultants by Paperfree EB5 Program
Get dedicated service, from finding the right information to complex investment challenges.
Real estate investment strategies
Multifamily investment strategy to boost investment portfolio returns.
Diversify in multifamily investment strategy to lower volatility and boost portfolio returns.
Value add real estate strategy helps investors drive capital growth.
The value add real estate strategy's first goal is capital growth, the second goal is some income. The strategy works with all property types
Investing in senior housing. Invest in senior housing real estate to drive stable returns.
Senior living investments will create social impact on the market with strong fundamentals: growing demand, resilience to economic cycles.
Invest in build to rent investment funds
Build to rent investment funds for passive real estate investing.
Invest In Real Estate Private Equity
Discover diverse private equity real estate investment opportunities.
Core real estate investment strategy to drive income vs capital growth
Core Real Estate Strategy is one of the most conservative modern real estate investment strategies focusing primarily on income.
Passive real estate investing, best investment strategies, opportunities and more.
Passive real estate investing allow you to be a silent partner in large-scale real estate investments that can produce earnings and return on investment.
Invest in Syndication Real Estate
Investing in real estate syndicates as a part of alternative investments strategy
Investing in apartment buildings
Apartment investments are a sound investment option for numerous investment strategies.
Multifamily fund
Multifamily funds have one of the highest average annual returns of all real estate investments. Find private and public multifamily investment funds below.
Multifamily value add strategy
The main attribute of the multifamily value add strategy is the focus on capital growth. The investment strategy has a median risk profile.
Core plus investment strategy real estate to generate income
Core Plus Strategy focus to generate income based on mid-low risk profile. Learn more.
Opportunistic real estate investment
Opportunistic real estate investment strategy drives capital growth with heights risk of default.
EB5 investment projects list
Find the best fit for your immigration strategy and investment goals for EB5 projects in USA local markets.
Value add real estate funds
Value add real estate funds aim to increase cash flow and value by buying and improving underutilized assets, potentially yielding higher returns than traditional real estate investments.