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Stress Test Stressing You Out?
I’m sure by now you’ve heard all about the new changes to the “Stress Test”. It’s been all over the news, and I’ve already heard it explained a thousand different ways…..and really….it’s not that big of a deal.
At least, if you learn to think like a lender.
See, banks are investors just like you and I. They have way more money, and a ton of people that work for them, but at the end of the day, they follow one simple rule. The same rule that every investor has followed since the dawn of time. The number 1 rule in investing…
... don’t lose money.
Whether you’re lending your crazy uncle $20 and he promises to pay you back $25, or lending $1,000,000 on a home at 2%, the same rule applies. No one wants to lose money. It’s no fun.
The number 2 rule in investing?
Make a return on your investment.
There’s a few other rules that can be applied to most investments, but these two laws of investing are universal. What’s not universal is how lenders go about assessing the risk related to their investments.
For instance, the A banks want to know that the people borrowing their money are good at making payments on time and in full. So they look at the credit history of the borrower first.
Whereas a private lender will most likely look at the equity in the property first, then how the payments are going to be made. Even if it’s the same property, and the same person borrowing the money, the criteria for the lenders are completely different.
Learning to think like a lender will help you get more deals closed, and ultimately make you more money as a real estate investor.
Of course, as you’re learning and growing, it’s best to use a broker who knows what they’re doing. There’s no limit to the amount of deals that can pass right by an investor who doesn’t know which lenders are looking for what.
If you haven’t guessed, today’s episode of the “Investment Property Income” podcast is all about understanding how lenders think, and what they look for. This will help you get more deals closed.
www.guidetothegrind.com
View all episodes
By Jonathan Tillger & Geoff Edie
5
22 ratings
I’m sure by now you’ve heard all about the new changes to the “Stress Test”. It’s been all over the news, and I’ve already heard it explained a thousand different ways…..and really….it’s not that big of a deal.
At least, if you learn to think like a lender.
See, banks are investors just like you and I. They have way more money, and a ton of people that work for them, but at the end of the day, they follow one simple rule. The same rule that every investor has followed since the dawn of time. The number 1 rule in investing…
... don’t lose money.
Whether you’re lending your crazy uncle $20 and he promises to pay you back $25, or lending $1,000,000 on a home at 2%, the same rule applies. No one wants to lose money. It’s no fun.
The number 2 rule in investing?
Make a return on your investment.
There’s a few other rules that can be applied to most investments, but these two laws of investing are universal. What’s not universal is how lenders go about assessing the risk related to their investments.
For instance, the A banks want to know that the people borrowing their money are good at making payments on time and in full. So they look at the credit history of the borrower first.
Whereas a private lender will most likely look at the equity in the property first, then how the payments are going to be made. Even if it’s the same property, and the same person borrowing the money, the criteria for the lenders are completely different.
Learning to think like a lender will help you get more deals closed, and ultimately make you more money as a real estate investor.
Of course, as you’re learning and growing, it’s best to use a broker who knows what they’re doing. There’s no limit to the amount of deals that can pass right by an investor who doesn’t know which lenders are looking for what.
If you haven’t guessed, today’s episode of the “Investment Property Income” podcast is all about understanding how lenders think, and what they look for. This will help you get more deals closed.
www.guidetothegrind.com