In order to be a successful, respected, and trustworthy lender it is important to be meticulous in your process. While time consuming, due diligence is a crucial part of a lender’s job.
Each step of the lending process requires attention to detail, but there are three main areas that lenders must examine very closely in order to have the most successful outcome for all parties involved.
Familiarize yourself with the property. Take the time to research the financial and physical characteristics of the property. Before beginning the underwriting process, you’ll want to have a deep understanding of the current conditions, if renovations are necessary, the location, and the size. You will also want to look at the profitability by examining the property’s current and forecasted income and rent roll. Lastly, compare similar properties to ensure that the requested loan amount is reasonable.
Get to know the borrower. There is a substantial amount of information required from the borrower in order to be approved for a loan. You’ll want to gather all of the information provided and assess the risk that they carry. Inspecting several documents is a tedious task, however, by doing so you will be saving yourself the headache later on. It is well worth your time to guarantee that the borrower is able to make payments on the loan.
Pay attention to what works and what doesn't. Once you have some experience under your belt and have done your due diligence it will be easier for you to determine what deals will close and which ones won’t. Although each deal is going to vary to some extent, you will also find things in common. Examine details closely and use your knowledge from previous deals to make innovative suggestions as you negotiate loan terms.
Having a meticulous process allows all parties to enter into a deal with confidence. Taking shortcuts often leads to more issues down the road, so it is better to take your time on the front end.
Experienced lenders specialize in delivering prompt and time-effective service. They have repeated due diligence processes numerous times and know exactly what to look for. As an investor, do your research and find a lender that understands the landscape of your particular investment. Just because the process is tedious does not mean it has to be painful for those involved!
Reach out to the experts at CALCAP Lending to find the right loan program for you!