It is not difficult to become a real estate loan broker. You must have a passion for real estate investing, you must be organized and a good communicator.
As a loan broker you’re often the link between an investor ready to purchase the next property and the financing source. You must move quick and you must have lenders lined up.
Aligning expectations is key as there are many parties involved. While facilitating a rental loan refinance may be less stressful, when working on a purchase everyone is on a timeline. There is a purchase date, your client, title company, seller and real estate agents on both sides. If you are not on the same page friction will occur.
It is your job to conduct an orderly, tidy transaction that allows your client to achieve their goal and land the next real estate investment. There are many lending partners to help you facilitate this role – we will discuss a white label loan broker program.
Let’s talk about the steps to becoming a best-in-class loan broker for real estate investors!
What it takes to become a loan broker for real estate investors
As a loan broker you will spend a lot of your time communicating with people. Although you are getting in the real estate business the reality is, you’re in the people business. Your future clients trust you with a very sensitive area, their finances. Much of what you provide gives your clients confidence, peace of mind and the tools needed to move forward with a deal they can feel good about.
As a loan broker, you are a resource. Many real estate investors may have inquired into getting loans directly so you need to position yourself as a professional who offers value in order to thrive. This often means taking this daunting task off their plate so they can focus on what they do best. You need to make it simpler, easier and of course – provide them with the best financing options out there.
Loan brokers are communicators
Communication is a key element to becoming a successful loan broker. You need to work with your clients to identify the most effective communication method for them. You’re going to be explaining some very complex and nuanced details as it pertains to loan financing. You will need to develop and maintain productive lines of communication because there will be hiccups and that will require relaying less-than-ideal news.
As touched upon, your role is to coordinate funding which means working with many different parties. You are often the “lifeline” who keeps the deal moving forward. You must manage your client, brokers, sale agents, closing attorneys and your lender.
Loan brokers are self-starters
Typically, loan brokers work independently but have an extended network of contacts that they work closely with on a regular basis. The hardest part of becoming a loan broker is developing the upfront relationships with key parties. Such parties include a trusted and reliable lender, title companies, real estate agents and wholesalers. You need to be patient and think outside the box when attracting and developing new partnerships. If you choose the right private lender they will supply white label marketing material that can be used when outlining your services to potential partners.
As a loan broker you will need to be comfortable with the closing process. This means knowing every detail and nuance. You will most likely spearhead any negotiation on behalf of your client. A good private lender will provide, as part of its white label loan broker program, an overview of the closing process.
Primarily, your role is to provide your clients with the best funding resources available. You must stay proactive and discuss upcoming program changes or new programs with your private lender. A great private lender will have a very competitive program, a streamlined white label broker program and be on the leading edge of new loan products. This provides you the cutting edge.
First step to get started
If you haven’t already, you should research what your states requirements and regulations are for loan brokers. Remember that only state-specific information is going to be relevant (unless you lend outside your state) to becoming a loan broker.
Depending on the type of investments you focus on you might be able to work successfully in the industry without licensure.
Hard money loans, also referred to as business purpose loans, via a private lender don’t always need licensure depending on the state you are in. However, you must check your local states rules and regulations – California is much different than Florida.
Most states provide a compilation of resources, documents and information covering licensure, qualifying prerequisites, course requirements and content outlines for loan broker examinations. Only trust information about loan broker licensing from official state sources.
Something else you should consider is setting up an entity and a bank account if you haven’t already. You will typically get paid at closing and the title company will need an invoice and wire instructions to send your fee. An accountant or attorney can assist you with this if needed.
Find a private lender with a white label loan broker program
What is a private lender? Private lenders are some of the available options in the real estate market and come with various benefits. If you have no experience working with a private lender, you need to start educating yourself on the subject before taking the bold step. Here are the advantages you’ll get from a private lender.
Private lenders exist to provide real estate financing. They provide business purpose loans to facilitate the growth in forms of short-term bridge loans and long-term rental loans.
Private lender’s require less documentation and offer quick turn times. You are using their capital to fund your loans. Private lenders want to make it easy for you to submit and close deals, that’s why they provide white label loan broker programs.
So what is a white label loan broker program?
In simple terms it is the infrastructure and resources you need to perform your job. Such items include:
- White label marketing material
- Outline of required documents per loan type
- Lending process overview
- Portal to submit new loans
- Access to loan specific portals to upload loan documents
- Low pricing for real estate brokers (so you can make money!)
- Competitive rates and loan-to-value ratios
- Frequently asked questions
- A dedicated account manager
When using a white label loan broker program, you remain in control of the process and main point of contact for your client. The private lender will review documents you upload in near real time and provide any feedback via the portal. Once you have uploaded sufficient documentation the private lender will order an appraisal. Once this occurs the clock is ticking. You must get all remaining documents uploaded so that once the appraisal is back you are ready to close!
How to get loan volume as a new loan broker
Attracting new clients and keeping clients are two different things.
What’s the secret?
As a loan broker you may already have a strong network of real estate investors to work with. If you don’t, how do you start?
It’s worth remembering that to attract new clients and develop a good reputation you will be a marketer. You are your brand. You will need to keep marketing.
A good place to start is by setting up social media accounts that could help you join local real estate investor groups.
Social media is a good place to stay active and share valuable information with potential, current or past clients. Staying top of mind is key. You want people thinking of you when considering their next real estate purchase or refinance.
Your private lender can provide you with white label marketing material that you can use to post on social media or send via email.
The second and perhaps most important aspect in earning business is having the best program to offer! Lowest rates, highest loan-to-value ratio’s and low costs are key. This means partnering with a private lender who has a strong white label loan broker program.
Let’s take a deeper dive into marketing and building your client base.
Building your client base
Firstly, don’t get discouraged. It’s going to take time to develop a solid client base. But if you do your job well, they will become repeat clients!
Getting your name out there for clients to see is key. You need to become part of the community if you want to be a respected and recognized loan broker. Make sure you specialize in a specific market – investor loans are a great place to start.
One of the first steps should be to have a professional website built. This shouldn’t be elaborate but consist of concise information. Your website is an extension of your brand.
You should look at your website as a glorified “lead form”.
This is where clients can contact you directly. You may want to consider using a platform called Calendly so that visitors can set a time to speak to you based on your calendar availability.
Eventually, as you drive more traffic to your website you will receive more calls and emails. Unfortunately, you will not be able to service every single potential client.
To avoid wasting your time and your clients time, you should include information on your website that will disqualify certain opportunities. For example, if you state on your website that you only service your home state, others from across state borders will not reach out. It is highly recommended that you put your loan programs on your website. You want to make sure that people you speak to are qualified leads.
Leverage social media
Many people spend time on various social media platforms. Many for different reasons. It is important to be present on social media, you should find the platforms where your clients frequently visit.
Social media is a great communication outlet to establish yourself as a trusted expert. You do not have to be “salesy” and “aggressive” – in fact, you shouldn’t be. Try sharing “insider tips”, latest trends and general valuable information that your client base would like. Putting a face to the name and coming across as approachable and authoritative will go a long way making clients feel comfortable.
Some marketers say that it takes seven or more touch points for someone to buy a product. If your clients see you on all the platforms they visit, receive emails, newsletters, texts or phone calls they will soon get used to seeing you. Your goal is to the TOP of mind. You want clients to think of you when seeking financing for their next real estate investment.
Answer the critical questions for real estate investors
Many people get inspired by fix-and-flip television shows and want to jump into the property world. It’s made to look so easy! However, there is a lot of nitty-gritty and serious aspects of obtaining financing – and performing the rehab work itself.
These people want to be fed reliable information by an approachable and informed loan broker who understands nuances of real estate investment financing. That is why it pays off to share valuable content on social media and take the “teaching” angle. You are the one who has been through the process with many clients and have experience.
One way to share this information with potential clients is to do a question-and-answer session on a social platform. You can do it “live” on Facebook, Instagram or LinkedIn. Whichever your preferred platform, you can record the session and repost it on other medias. This is a great way to answer those key questions clients have at once – instead of having 10 different calls, you’re having one! If you continue to produce quality and valuable content your following will increase over time.
It is always a good idea to “recycle” the question-and-answer sessions. For example, you can take the questions asked by potential clients and create info graphics to post later that week. Check out Venngage, it is a cheap resource to help create attractive posts and flyers.
Offer what others don’t: fix-and-flip and long term rental loans
To excel you must offer what others cannot. This usually means QUICK financing at attractive rates. Real estate investors seeking new deals don’t usually have time on their side. You will be dealing with lots of impatient clients who have to beat other investors to land the deal. That is why you need to be partnered with a private lender who can provide fast loan pricing via its white label loan broker platform. If you can tell your client whether a deal can be done or not quickly – they will respect you.
Once you have preliminary financing you need to focus on a quick close. You need to have a system that allows you to upload and get client documents reviewed and approved quickly. Make sure you find a private lender that provides this infrastructure. One of the most time-consuming aspects of getting funding is the appraisal process. You must gather key documents from your client to get to the appraisal process quickly. If you can facilitate, your client can receive financing in 15 days.
Because you work specifically with real estate investors there are other items to take into consideration. You need to be aware of rehab costs and various fix-and-flip lending options, refinance and seasoning requirements.
It is best to use a private lender to provide financing for your clients focusing on real estate investments. Many lenders can provide up to 100 percent of renovation costs. This reduces the amount of cash your investor may need.
As you have discussions with your client make sure you ask what the exit strategy is. If your client wants to hold as a rental property you can also facilitate a low cost refinance. Your clients might be following the BRRRR methodology (buy, rehab, rent, refinance, repeat). This strategy allows your clients to recoup initial investments, and more, to reinvest in the next project.
These loans typically fall into the cashout refinance or rate and term refinance category. They are long term 30-year fixed rate loans specifically for non-owner occupied properties. Certain private lenders provide low document options (no income verification) and can close within 30 days. This process is typically much easier and quicker than your convention mortgage options.
Be the go-to real estate investment loan broker
LendSimpli enables loan brokers to standout from the crowd. Using its white label loan broker program, you have all the resources you need to provide leading loan programs to your clients.
Utilizing the simple quote request process, you can facilitate quick and efficient closings. You’ll leverage LendSimpli’s extensive capital when finding the perfect financing options for your real estate investor clients.
Disclaimer: The above is provided for informational purposes only and should not be considered tax, savings, financial, or legal advice. All information shown here is for illustrative purpose only.