Choosing an Investor Lender: 12 Questions to Ask First
The right lender can make a deal and the wrong one can sink it. Ask these twelve questions before you commit.
Short answer
Before choosing an investor lender, ask about the programs they offer, leverage and rates for your scenario, total fees, prepayment penalties, how they set value and rent, reserves, draw processes on rehab loans, typical timelines for a complete file, which states they lend in, and who your point of contact will be through closing.
Key points
- Programs, leverage and total cost.
- Prepayment, draws and timelines.
- Coverage area and a real point of contact.
The 12 questions
- Which programs fit my deal: DSCR, fix and flip, bridge, portfolio or commercial?
- What leverage and rate can I expect for my credit and property?
- What are the total fees and points, itemized?
- What prepayment penalty options do you offer? See DSCR prepayment penalties.
- How do you determine value and rent? See the appraisal rent schedule.
- How many months of reserves will I need?
- On rehab loans, how do draws work, and how fast are they funded? See how rehab draws work.
- Do you charge interest on undrawn funds?
- What's a typical timeline for a complete file?
- Which states do you lend in?
- Can I borrow in my LLC? See buying a rental in an LLC.
- Who will be my point of contact from application through closing?
Ready to start? Send your scenario and a KREC loan advisor will walk you through the next step. Talk to an advisor
What the answers tell you
Clear, specific answers in writing are a good sign. Vague answers on fees, timelines or penalties usually mean surprises later. The best lender relationship lasts across many deals, so pick one that takes the time to understand your plan.
Frequently asked questions
What should I ask an investment property lender?
Ask about programs, leverage, rates, total fees, prepayment penalties, valuation, reserves, draw processes, timelines, coverage area and who your point of contact will be.
How do I compare investor loan offers?
Compare total cost over your expected hold, including points, fees, rate and prepayment penalties, not just the rate.
Why does a point of contact matter?
Investor deals move fast and raise questions. A dedicated contact keeps conditions, draws and closing moving without delays.
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