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enced real estate agent who moved the home quickly through the sales process. LESSON: A lender who has truly been in the real estate investors’ shoes understands the pitfalls of real estate deals better than just about anyone else because they have been there as well. advantage when trying to complete the renovation quickly, often saving him valuable time and thousands in loan fees. However, this can be a risky proposition. What if the loan doesn’t close and he’s wasted his time and money on the renovations he’s started? As a lender, some of the things we do to help him reduce that risk are vetting the title carefully for any issues well before closing and providing himwith a thorough appraisal to confirm his exit price.” One of our borrowers routinely starts the renovation process before closing. He always gets written permission to do this from the sellers. It may seem like a small thing, but getting a fewweeks of construction in before closing is a huge
HOW INSIGHT REDUCES RISK Let’s face it: the process of buying and selling properties has inherent risks. Real estate investors have decided that they are willing to take risks for the sake of independence and freedom along with the chance to be their own boss and control their schedules, not to mention to have a chance to reap some truly amazing rewards. To some real estate investors as well as some lenders, cre- ativity means risk. If you don’t fully understand your industry, the decisions you make are uneducated and, by extension, riskier. That risk causes some lenders to avoid getting “too creative” with financing terms because an uninformed inves- tor’s lack of education is inherently riskier for their bottom line. Fortunately, insight and experience can dramatically reduce risk, as is evident in the attached case study. The bottom line is that a successful real estate investor is not just creative for the sake of creativity, but because he or she really understands the real estate investing business. Likewise, successful financiers of all types understand and value the knowledge that backs effective, profitable creativity in the real estate investing space. Taking on what seems like a significant risk to some is not necessarily risky for a lender or investor with the right knowledge and experience. Lenders who are able to be creative in funding deals not only help their borrow- ers land the best deals with the best terms, they help themmit- igate their overall risk, ease their anxiety and help them stay on track by transferring their confidence and experience. • Bobby Montagne is a real estate entrepreneur with three decades of experience in commercial and residential property development, finance, and sales. He is the President and found- er of Walnut Street Finance, a private money lender, and funds renovation projects in DC, VA, MD, and DE. You can see Walnut Street’s advertorial in this issue for more information and to download an ebook, “Essential Math for the Fix and Flipper,” with valuable information about analyzing projects quickly and efficiently.
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98 | think realty magazine july :: august 2017
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