Don't Let it Happen to You! Banker reveals the
I travel a lot. There have been times I've been in a different state, a different city, every day.
And everywhere I go, I talk to people. Students, other investors, Realtors, brokers, attorneys, bankers. I love to hear what they have to say, to learn new things, to get new ideas that I can use in my own business and teach to my students. It's one of my favorite things about what I do.
And while I hear new things all the time, I'm also amazed at how constant things are. Year after year in city after city, people have the same experiences. The same things work, and the same things don't work, no matter where you are on the map or what it says on the calendar.
I was struck by this the other day when I was talking to a banker friend of mine that I hadn't see in awhile. This guy knows his stuff he's been in commercial lending for almost 30 years, in banks both big and small. He's worked through high and low interest rates, up and down economies, bear and bull markets.
Through it all, he's made loans. That's his job. If he doesn't make loans, he's out of work. And he loves to give loans to real estate investors, because he knows that a good real estate deal is one of the safest investments going.
But here's the problem: in all his years of commercial lending, he has never had a real estate investor come into his office prepared to do business.
That's right never.
And I'm sure he's not alone. Real estate investors may say that banks don't want to lend to them. But they may not have considered that they could change that, simply by making it easier for the banker to say "yes".
One of the first things that go wrong is that the investor doesn't take the time to develop a relationship before asking for a loan. We may live in a high-tech age, but the majority of deals are still based on the handshake test: what's your gut feeling about the other person? Do you like them? Do you trust them? This basic rapport (or lack thereof) can determine whether you even get the opportunity to present your facts and figures.
If you get that opportunity, you then need to tell a good story. We've talked about the information you should provide to a lender when you're proposing a deal: financial statements, cash flow analysis, details on the deal in questions, tax returns, and a current copy of your credit report, for starters.
But when you're building a relationship, you also want to paint a picture for them of what you do. Keep a portfolio of before and after photos of your properties both those that you've flipped and those you've jazzed up and kept for cash flow. Invite them to tour of your properties or take them to look at a deal you're considering. Believe me, most of them would welcome the opportunity to get out of the office and you can take it as a chance to demonstrate your expertise and prove that you know what you're doing.
Remember, you're trying to build a relationship here and every good relationship has to be based on mutual trust and honesty. Play it straight don't try to hide things or make the lender dig for information. That will just make them suspicious. Lay your cards on the table but be prepared with solid information to explain and offer a solution to each problem.
Bankers are not going to come knocking on your door, offering you money. But if you do your homework, put time into preparation and take the time to listen and learn, you're likely to come away with a deal at some point. Remember, bankers want to make loans. It's up to you to make them want to make one to you. Russ Whitney
Don't Let it Happen to You! Banker reveals the
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