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The Waiting Game – Are Conventional Mortgages Good for Early Investors?

I’m bored. Not of real estate investing – that’s really, really exciting even during this still-crazy market we’re in – but of waiting. On the first two properties (doors 1 through 6), I decided to finance them with traditional mortgages through a broker. Time will tell whether or not that was a good choice. Still, it’s a painfully slow process, and it really has a way of tempering your excitement about moving forward through its tedious underwriting, waiting, requirements, and restrictions.

In my case, I have lots of complications through business ownership, multiple bank accounts, investment accounts, retirement accounts – the list goes on and on. If you’ve ever gone through the process of getting a mortgage on your home, you’ll remember the waiting and the documentation process. For an investment property, they dial it up to an 11 and, my favorite part so far is them basically locking down all my accounts for a month or so while the underwriters work their magic – no movement of cash, no big purchases, no big deposits, nothing out of the ordinary without lengthy documentation explaining what, why, how, who – you get it. It’s not how I work, so this is me – a square peg – trying to fit into a traditional lender’s process – the round hole – and I hate it. Why? Because it’s (so far) preventing me from going after the next round of properties. Even if I made cash offers on something I liked right now, it feels like it would derail the process for the two going through underwriting. I hope this is just rookie nerves.

For the next round of properties, I will look more closely at a few other options – first, local credit unions or small local/regional banks. For much of the success I’ve had in my career, relationships played a huge role – I need to find out if that happens in this space too. In our last business, we would “joke” that relationships flew the coup in small business banking years ago – most notably post 9/11. Since then, the very best relationships don’t seem to matter after the underwriters appear. Is it the same here? Time will tell. Second, I’ll take a look at private lenders. I’m happy to pay a little more in interest for a better, faster process than what’s in front of me now.

So, lots up in the air. We’re scheduled to close on the first two in about 2 weeks – I’ll post a follow-up when we do, and I’ll let you all know what I learn about additional financing options! If you have any feedback, I’d love to hear it in the comments!

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