The relationship you have with your hard money lender has the potential to be one of the most mutually beneficial and lucrative partnerships you have--so long as you choose a lender that values you more than a simple business transaction.
At Catalyst Funding, our goal is to establish this relationship and help you with whatever you may need as you progress through your real estate investing journey. Your hard money lender shouldn’t just approve your loan and never speak to you again until the payment is due.
By establishing a trusting relationship, your lender’s success can be enhanced by your success--and by providing a mentor-like guidance, they can help you maximize your profit with each investment. In addition to providing overall knowledge and tips, here are some specific ways your lender can help you make more money with real estate investing.
3 Ways Your Lender Can Help Maximize Your Profit
- Choosing the right strategy. Last week we talked about your options for real estate investments when it comes to selling quickly or holding the property for rent and as a long-term investment. That’s just part of the initial strategy; you also have to determine what kind of repairs you are going to do. Your hard money lender should be up-to-date on the housing market in the area and can give you guidance on this important decision. The last thing you want to do is over-improve (or under-improve) your rehab property. Additionally, your hard money lender can help to make sure that your investment decisions align specifically with the financial goals that you are trying to achieve. With that being said, keep in mind that it is up to you to make your investing decisions, as we are just here to offer some help if needed.
- After Repair Value. If you plan on staying in this industry very long, one of the fundamental processes is calculating After Repair Value. Your hard money lender should have significant experience in the real estate investing field and calculating ARV, as well as a strong understanding of the local market. Still, calculating ARV isn’t an exact process and nothing can be guaranteed.
- Choosing contactors. When you’re going through the rehabilitation process, you’re probably going to hire a contractor so you don’t have to do all of the repair work on your own [link to initial blog on choosing a contractor]. However, there’s a variety of contractors to choose from, and it’s important to examine the trade-off between quality and cost. Your hard money lender should have a list of recommended contractors and will help you choose the right one so you can keep more money in your pocket. We will not fund your repair draw until we have reviewed the repairs, providing a second set of eyes to aid in ensuring that the work is done properly.