Predator lenders will prey on anyone. Why rip off five or ten consumers when one fake commercial loan can yield the same output (for the predator). The singular best method for avoiding predatory lenders is to talk to lenders; lots of lenders. The mortgage banking business is filled with hard working and sincere professionals. The profession also has its fair share of sharks.. The only way to tell the difference is to network.
Scam artist and predator lenders make a point of attempting to isolate their potential mark (that would be you) and smother the person with so much attention and paperwork they have no time or appetite to discuss the matter with outside parties. These “outside parties” (according to the predator lender) are people like your spouse, business partners, friends and other lenders.
Another method is the predator attempts to place YOUR loan on THEIR timeline. Sounds reasonable at first as any loan must have a start and finish timeline. The issue with the predator lender that should raise suspicion is when their timeline has nothing whatsoever to do with your timeline.
When it comes to obtaining a commercial loan the best thing is to STAY IN THE MAINSTREAM. The mainstream includes community banks (local) nationally known lending sources, members of the Mortgage Bankers Association and known insurance companies. Another way of saying this is to do business with people that can be found without much trouble.
One of my friends that has traveled the world shared with me that his best experiences were when he sought out certain people and places, versus when people sought him out (as a known tourist) being dragged to places he had little interest. I think the same holds true when seeking a commercial loan. If you are being dragged into the loan, it’s probably a bad idea to keep being dragged.
Being in the real estate business on a full time basis means you already know some lenders. If those you know are unable to assist with the type or amount of loan you seek, ask for referrals. Being a known entity in the business, people you know will assist in this endeavor.
If you’re not on LinkedIn by now PLEASE join. This is a great place to network. Add me as a contact; I welcome connect invites. Join Property Management Professionals on LinkedIn; this is the biggest PM group on LinkedIn. Also, check out MultifamilyBiz.com. This site is a great resource for conferences and real time news in the industry including who is getting loans done.
My objective here is not to shut out the independent broker-lender. But too many times I’ve talked to people that shipped off a two-page “loan application” and with a $10,000 cashiers check that was never seen again. Don’t let this be you.
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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. For more information, visit: www.MultifamilyInsight.com