Originally Posted By John Dessauer On October 12, 2016
You’ve got a great idea to make money, but it will take some cash to get started. Here are some things worth considering before you apply for that investment loan.
1. Do Research Beforehand
Know what a financial institution expects from a borrower and make sure your financial profile will fit within those parameters. These all important loan requirements will differ from one financial institution to another, and it will help immensely to discover what is expected of you before you apply for the loan. For example, a lending institution may require you to have not only money for a down payment but enough cash reserves in the bank to cover several months of future payments. Such a loan condition as this is not uncommon, especially for a real estate investment loan.
2. Save Money For A Down Payment
You should start saving as much money as possible the minute you decide to become an entrepreneur! Having an adequate down payment before applying for your investment loan can be the deal maker. Having an adequate down payment also conveys the message to the lender that you are serious enough about this investment opportunity to risk your money.
3. Clean Up Your Credit Score
You should work on improving your credit score long before you ever apply for that first investment loan. A high credit score and a sizeable down payment are the two crucial factors for success in obtaining any loan. Your credit score will determine the rate of interest you will pay over the life of the loan, and it only makes good financial sense for an entrepreneur to obtain the lowest rate possible.
4. Investigate More Than One Source
If one financial institution declines your request for an investment loan or charges too high of an interest rate, try another. It’s no secret that some lending companies are more lenient with certain types of investment loans than others. Plenty of research and networking with other entrepreneurs can help you find a lender that will be willing to work with you and provide better terms for your loan.
It is also important that a lender understands your investment strategy and what you are proposing to do with the loan. If you are interested in investing in a certain piece of real estate for example, and your lender knows nothing about this type of investing, this could really hurt your chances of obtaining the loan. Even if you can prove on paper the real estate venture profitable, if the lender doesn’t have a good grasp of the concept, your efforts may be in vain, and you will be turned down for the loan. Through networking with other real estate investors, you will be in a much better position to find a loan officer that understands your strategy.
5. Consider Other Financing Options
In real estate investing, don’t neglect to investigate such loan options as owner financing, if the owner owns the property and not the bank. If you are an entrepreneur wanting to borrow money to start your own business be sure to investigate other lines of credit such as utilizing credit cards or obtaining a second mortgage.
“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer