5 Ways Brokers Can Help Investors Navigate Short-Term Financing Options

Short-term financing solutions provided by private lenders are incredibly useful, especially when compared to traditional real estate financing options. These loans can be used to fund a wider variety of deals, including fix and flip investments and new construction projects. They also typically have less stringent application criteria, which means investors can still secure funding with a less than stellar credit history, and they can be used for financing unconventional deal scenarios. Additionally, these loans can be approved much faster than traditional mortgages, which is crucial when pursuing time-sensitive investment opportunities. Offering these loans to clients can help them access more potential investments, and here are a few ways brokers can help investors navigate short-term financing options.

1. Educating Clients on Short-Term Financing Basics

Some investors aren’t familiar with short-term loan options because they’ve simply never used them before. As a broker, it’s crucial to inform your clients about the types of loans available, and the basic terms of each program. For example, fix-and-flip loans offer additional funds to cover renovation costs on top of standard acquisition financing. The main benefit of going with a short-term loan is that the loan period, and often many other loan terms, can be tailored to the specific needs of the investment. These loans offer some unique advantages such as unmatched flexibility and a streamlined application process, so it’s important that you educate your clients about the benefits of this type of financing.

2. Matching Financing Solutions to Investment Goals

You should also take time to learn about your investor’s goals, so you can help recommend a loan program that best suits their project. For home flipping, many lenders offer interest-only loan options, where the principal amount is due only at the end of the loan period. This is great because it frees up capital for an investor to help them focus on completing renovations. New construction loans come in a few varieties as well, such as construction-to-permanent and construction-only. A bridge loan can also be useful for covering gaps in an investor’s finances, such as securing a down payment on a new property while still in the process of selling an existing home.

3. Comparing Costs and Terms

It’s equally important to help your clients understand the total costs involved with securing this type of loan. Aside from breaking down basics like loan interest rates and repayment terms, there may be additional costs such as origination fees which may need to be explained further. It can also be helpful to provide clients with a side-by-side comparison of various loan options to help simplify their decision-making process. Finally, consider negotiating with your lending partners so you can secure the best possible terms for your clients.

4. Streamlining the Application Process

You can help your clients save time in the application stage of their investments by preparing them appropriately. Each lender will require that you provide several documents including bank statements, proof of income, and a written plan for the investment. Having these documents ready beforehand is sure to expedite the application process. You may want to offer your clients a step-by-step guide or checklist to help ensure there are no delays when applying for financing. It will also be useful to leverage your personal connections with lenders to help speed up approvals and get funding secured faster.

5. Offering Post-Financing Support

The final thing you can do to help your clients is offer post-financing support. Utilize your existing investment knowledge to help them manage their projects and utilize funds effectively. You can also assist clients with managing repayment schedules and getting ready to apply for refinancing if needed. Following up with your client post-transaction helps to build lasting relationships with them and make them more likely to return to you for repeat business.

RCN Capital

The easiest way to save on an investment is to obtain financing from a real estate lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance a real estate project, RCN Capital has competitive loan options available.