It’s only a few weeks until the end of this tumultuous and uncertain year, but there are still interesting and even lucrative real estate opportunities on the table. Typically, you’d submit your application to a financial institution and wait it out, but this opportunity won’t be available for long. It’s crucial that you have your funding in order before the clock strikes midnight on December 31st. Can you even secure the financing you need by the end of 2020?
Ambitious? Yes. Impossible? Not at all.
Closing a loan by the end of 2020 may seem like a tall order, but with the right lenders in your corner, it’s entirely possible to get it done. If you’re looking to secure funding for your project by the end of the year, here’s what to look out for in a lending partner:
Work with a lender known for speed. Time is not on your side if you want to close a loan in a few weeks. Traditional lenders are known to take much longer than that – sometimes months at a time – to review an application. If the review process by itself takes up all that time, it’s a good indicator that you won’t meet your December 31st deadline. To increase your chances of closing a loan by the end of 2020, look out for a lender that has a proven track record of closing deals in days or weeks.
Go straight to a lender who will present fewer obstacles out the gate. A traditional lender could turn down your application for several reasons, including your own personal credit and financial history. If you have less-than-stellar credit, it’s best to skip traditional lenders that will say “no” to your application based on this factor alone. That precious time spent waiting just to be turned down could have been spent working with a lender that doesn’t rest your application on these factors.
“The borrower’s personal financial history and the opportunity on the table are not necessarily connected and should not be dependent on one another,” said Kevin Wolfer, CEO, Kennedy Funding.
Check that your lender has closed loans of your type. Many traditional and alternative lenders will not work with certain property types, such as raw land, or in jurisdictions outside the U.S. Before you submit your application, check to see if your lender has successfully closed deals of your desired type. Otherwise, the little time you have left will be spent waiting for an inevitable rejection.
Look for a lender with flexibility. Particularly in 2020’s volatile commercial real estate climate, banks and other traditional lenders are restricting the deal types they accept. Opportunities in hospitality and retail, for example, may be capped at these institutions. This means that your application has even lower chances than usual to be approved. Work with a lender from the get-go who will take your unique scenario into account so they have the opportunity to review the merits of the deal instead of rejecting it forthright.
“At Kennedy Funding, we don’t and won’t block out entire sectors,” said Wolfer. “Because we are not beholden to policies set by a bank, we have the ability to examine the merits of each deal on its own and choose the ones that have the best chances to succeed, regardless of industry.”
Be ready to supply the documentation needed. Direct private lenders like Kennedy Funding will require at least three core documents to assess your application: a clean title, a recent appraisal, and an environmental report. Depending on your application, additional financial records, site plans, or other documentation may need to be submitted as well. Communicate frequently with your lender to ensure they have everything they need, and if they need more information, be ready to provide it quickly so it can be reviewed in good time.
At Kennedy Funding, speed and flexibility are at the center of our lending process. Our ability to examine the merits of each deal quickly means you’ll have a “yes” or “no” within days instead of months. With the clock ticking this late in the calendar year, that time saved makes all the difference.