I have a favorite saying. Lack of proper planning on your part does not constitute an emergency on mine.
At the same time, one of the reasons that real estate investors use hard money is speed. If you find a great deal – let’s say it’s bank-owned – and the seller will give you a great price if you can close in 10 days, you need either cash, private funding from friends and family, or probably hard money.
Assuming you don’t have cash or wealthy family, you might need hard money. Here’s what you should do.
- Don’t wait until 3 days before closing to call a hard money lender. That reason should be obvious.
- If the property is NOT on MLS, make sure you have electronic photos of the property ready – you should have taken them when you first visited the property, both inside and all exterior shots. If you don’t buy the property, then delete them, but if you are buying the property, you have documentation of the “before.” It will also help you document your improvements later if that becomes necessary when you resell.
- Have a brief bio of your investing experience all ready, your rate is dependent on it. This can be bullet points, such as: 3 flips completed, hold 4 rental units
- Have signed versions of P&S contracts and addendums all scanned in and ready to send. They are critical to the closing.
- Know your rehab budget by line item, or be working on it. Be ready to explain why x improvement is needed but y improvement won’t help your resale. Better yet, explain in your executive summary. Have the budget in a spreadsheet that is easy to read. No long difficult to read paragraphs that ramble.
- Pay attention to the lender instructions for getting the deal done – they have a process they’ve done over and over, and they need to do due diligence. Make it easier for them and it will be quicker for you.
- Be available. Nothing is more frustrating than working hard to pull the pieces of a deal together only to have the borrower regularly ignore his cell, or not read and answer email. If you are in a deal that requires speed on the part of the lender, than you need to make yourself available so as to not hold up the process. Yes, we all need downtime and family time. And if you are in another appointment, of course you need to wait to answer or reply. But if you’re not available quickly, then you are the one holding up the works. It could cost you a deal.
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