Qualities to Look For in a Real Estate Lender

Real estate investing continues to be one of the best ways to build long-term wealth. And if you’re already a real estate investor, then you’ll know that financing is an incredibly important piece of the real estate investing puzzle. Choosing a good loan provider can greatly affect the outcome of your investment projects, as the right provider will ensure the financing process goes smoothly which gives you one less thing to worry about. Going with the wrong provider can end up being a source of problems that cost you time, or even worse, money.

When you’re selecting a lender, it’s important to evaluate them by looking at the qualities that make them a reliable loan provider. If you’ve been looking for financing on a real estate project, here are the qualities you should look for in your lender:

#1: Reputation and Track Record

A company’s reputation plays a big role in determining if you’re willing to work with them, and it becomes even more important when you’re choosing a financial provider. A good lender will have a history of providing loans at reasonable interest rates on successful projects. Be sure to conduct due diligence to avoid lenders who engage in predatory practices; read reviews, and if possible, seek out referrals from trusted sources. You’ll know you have found a quality lender if they have experience in the real estate space. A lender with a proven track record will be able to provide you with expertise on real estate markets that you won’t find from a nonqualified source.

#2: Speed and Efficiency

The next most important quality of a lender is how quickly they can provide you with the financing you’re looking for. Traditional lenders like banks tend not to be the most effective way to finance real estate investments. Besides their unwillingness to lend on riskier projects, like fix & flips, they have incredibly long application processes which can take months before funds ever get delivered. A private lender that has experience with real estate investing will be the best option for most cases. The application process for private loans is less stringent and relies more on the property itself than your personal credit history. Funds can be delivered in as little as two weeks if you are willing to work closely with your lender.

#3: Flexibility and Customization

Another good quality to look for in a lender is their ability to work with you to get you financing that fits your specific loan scenario. There are lots of different ways to invest in real estate, from owning rental property, to flipping, to new construction investments. That also means there’s no one-size-fits-all loan to cover every use case. A good lender will offer a variety of loan products to cover all these different scenarios, and a great one should be able to customize the loan to fit your exact needs.

A prime example of this is an interest-only loan, a type of short-term financing which only requires monthly interest payments until the end of the loan term, after which the principal amount becomes due. These loans are perfect for renovation projects because they free an investor to focus their funds on improving the property and marketing it for sale. Once the property has been sold, they should have the ability to repay the loan’s principal amount.

#4: Transparency and Communication

It cannot be stressed enough how important it is to have a lender that is communicative and transparent about their loans and business practices. A qualified lender will provide borrowers with detailed information about loan terms and conditions, all associated fees, and a timeline of the process. There is nothing worse than being charged with hidden fees on your loan, or dealing with conditions that weren’t made clear initially. You will know you’ve found a lender you can trust if they’re willing to maintain open lines of communication throughout the entire loan process. If anything does go wrong, you should be able to reach out and speak to someone that you know will help resolve your issue.

#5: Going Above and Beyond

The final quality you will want to look for in a lender is the ability to provide exceptional customer service that’s above and beyond what’s required. This shows that they truly do value you choosing them as a provider and that they take pride in their services. The best lenders offer support and guidance for your project beyond just providing you with financing. They may be able to offer you resources that help your project reach its final goal, or connect with you real estate professionals (like accountants, for example) that help you make the most of your investment. A lender that goes above and beyond in providing service is sure to be one that you can trust.

RCN Capital

The easiest way to save on a real estate investment is to find a good lender that can get you 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. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance a long-term rental property?Connect with us today.