Who’s the Most Important Member of Your Power Team?
Six Questions You’ll Want to Ask to Find the Right Person for this Critical Role
You’ve heard me talk about building a “power team” of specialists to help you build your business – an attorney, a Realtor, a title agent and a mortgage broker. All of these people have a role to play in your success. And if you find the right ones and treat them right, they’ll stick with you over the years because guess what – when you make money, they make money, too.
All of the people on your power team are important – but one role stands out from the pack. The person in this role can be the biggest factor in your success – or he or she can cost you a lot of time, money and lost deals.
I’m talking about your mortgage broker. The broker does something that you cannot do for yourself – connect you with the money you need to build your business. And let’s face it, without those loans, you’ve got no business to build.
(And just to be clear – I’m not talking about mortgage lenders or bankers. These are not the same as brokers – I cover the differences and why you want a broker in another article. You want a broker.)
Sure, a good Realtor is important. But you can find properties on your own, too – and even if a Realtor finds all the greatest deals in the world, what good is it if you don’t have someone to finance them?
Good Realtors know this, so they can be a great source of broker referrals. As I always say, like people hang with like people, so a good “scrap” Realtor will know several good mortgage brokers who are ready and willing to work with investors like you.
But that doesn’t mean you should just sign up with the first broker your Realtor recommends. Just like you interviewed Realtors, you’ll need to interview brokers too. Here’s the key questions you’ll want to ask – and what to look for in their answers:
Question #1: How many years of experience do you have as a mortgage broker? Same as I told you for Realtors – you don’t want to use your mom’s best friend’s son who just got into the business. You want someone who is seasoned, who knows the products out there, who knows the neighborhoods you’re working in. You want your guy – or gal – to have a minimum of three years of experience as mortgage broker.
Question #2: Are you a corresponding lender? Brokers use different terminology in different parts of the country, so they might call this by another name – if you get a blank stare to this question, re-phrase it: Do you have the ability to close a loan yourself? Basically, a corresponding lender is authorized to carry a loan for a short period of time, then sell it to a lender. This helps if financing from a lender falls through at the last minute.
Question #4: Do you specialize in nonconforming loans? This is a little trickier these days, as nonconforming loans (also known as subprime loans) have gotten a black eye in recent years. But they’re still available, and you’ll need to use them to build your business.
Question #5: How quickly can you close loans? In most cases, a broker should be able to close a deal in under a month. You’ll need that kind of turnaround if you’re going to be buying one property a month, as I recommend. In some states, there may be laws on the books that slow the process down. But in general, if a broker tells you he needs 45 to 60 days to close, cross him off the list.
Question #6: Can I have some references? Ask for two or three names of other investors that the broker works with regularly. And don’t just ask – follow up and call them all. Ask how responsive the broker is, how long he takes to return phone calls, how long deals take to close, how well he’s come through with last minute saves and creative financing options.
The answers to these questions will give you a good idea who you want to add to your power The answers to these questions will give you a good idea who you want to add to your power team. (Of course, you won’t know for sure until you see what kind of deal they can offer you – to learn more about that, read my piece on Good Faith Estimates.) And remember, you don’t have to pick just one – if the interviewing process yields more than one good prospect, keep them all on your contact list. There’s plenty of room on your power team – as long as all the players are helping you get where you want to go.