In real estate investment property financing, there are usually three main pillars for every deal. You have a lender such as RCN Capital, a private, direct, hard money lender that has a set of guidelines and looks to approve deals for borrowers. Then, the borrowers, who are people looking to become real estate investors or entrepreneurs looking for that second or third source of income to add to their portfolios. Finally, the third piece of the equation is the broker who is meant to make the process go as smooth as possible.
The broker usually connects the borrower and the lender and makes the deal come together to help both sides benefit. Borrowers have their heads down in day-to-day work on their numerous properties or are actively searching for more. The lender has lead generation sources but always relies on the brokers to advocate for them and attract borrowers to keep business flowing. Brokers play a pivotal role in this entire process and it is not a job to take lightly. There are many obvious and subtle habits brokers can develop over time to become hugely successful. This means they will always have clients who are coming back to work with them after a pleasant experience and they have lenders waiting on their next email for another money-making opportunity with a broker they can count on.
RCN Capital takes notice when a broker continues to improve, focuses on details and progresses from a start-up broker to a success story with numerous clients. We do our best to educate brokers, answer any questions they have and try to give them the confidence they need. However, there are habits that all successful brokers have in common that are easy to spot and replicate.
Learning experiences can happen on a daily basis in this industry. It is crucial to be a sponge and learn as much as you can about a lender, their guidelines and specific loan programs. When you are first starting out the biggest hurdle is having the confidence and knowledge so you can sound like an experienced broker right off the bat. There are always common questions that come up throughout every deal, so speaking with your lender about what those might be and taking notes to have the correct answers on hand is a great first step. At RCN Capital, the business development team will have no problem repeating or slowing down if we know you are trying to write the information down, we may also offer to send you marketing materials or additional information.
There will also be basic guidelines and necessary information for almost every deal. Be sure to ask your lenders about that and be ready to type or write that down. The more you can ask of your client up front, the more knowledgeable you will seem and the quicker you’ll get a deal done. Not having to double check with a lender every time a question comes up can save you significant time.
Speed is a big factor when it comes to closing on investment properties, the more you are familiar with lender guidelines, the more streamlined the process becomes. Consolidating all the necessary information into one email, sending that to your lender and being able to return a rough draft term sheet to your client in a timely manner is a certain way to make a memorable impression on both your client and lender.
Although it sounds obvious, maintaining organization can often be overlooked. There are many tools, apps and supplies at your disposal that can help you be more organized. This simple habit can make all the difference when dealing with numerous clients and lenders. Find a way that works for you and stick with it.
Your clients will come to you with numerous properties so that extra level of professionalism can kick in if you have everything ready to go and organized. You can answer questions quicker and save time during conversations or emails. Your clients will be able to notice if you are organized and that can make a difference in whether or not they decide to work with you again. Keep all the necessary documents organized, make checklists if necessary and make sure to keep track of closing deadlines. When clients ask about what else you need from them, organization can come in handy and allow you to answer with little to no hesitation.
This is another habit of a successful broker that can go a long way to securing more clients. The common misconception is that you must master numerous markets, cities and even states. However, if you just pick one market, focus on that, and learn what you need to. Focus on what information you need from your client about a property in your market before speaking with a lender.
Finding your market, and more specifically the properties you want to work with, can help you zero in on what your client should expect when it comes to closing time, amount of money, interest rates, term of loan, closing costs, etc. Make sure that you are submitting full files with all the information a lender would need for that type of deal. A single-family rental and 300 unit apartment building are going to require very different documentation, but also very different timelines, client questions, expectations, and options. Becoming an expert in your own market can give you confidence as a broker to broaden your area of business. If you can master one market, try mastering two. Start small and use the goal of growing your business as a motivator.
Being proactive is another habit that brokers’ clients will appreciate right away. Reviewing notes and constructing a plan of what you want to talk about and ask before every call is a huge plus. Having a list of questions ready for your client is an example of being proactive. If they know what you need from before the end of a call, deals start to progress much quicker.
Knowing what type of communication is required is another aspect of being proactive. Sometimes a quick email is the best way to communicate. Giving a quick update on a property or deal or sending over answers regarding guideline requirements is much better in an email format. This way the lender has it saved in their email and can always refer to it. Calls are more effective when there is a change during a potential deal that could make a big impact. You can also call when you have specific questions in mind that need answering quickly to keep the deal progressing. A habit to avoid includes emailing the client or lender and then calling them immediately after, before they get a chance to respond. Request a time to set up a call with your client or lender and they will be more inclined to respond quicker with a time that works for both parties.
Being proactive is a way to set yourself up as a broker to address any potential problems early in a deal scenario and giving yourself time to see if they can be remedied. All interactions with both the client and the lender should result in progression of the deal. This proactive habit will accumulate over time and lead to many deals being closed quicker.
Like many of the habits we’ve touched on in this article, this one too can have an immense impact on your career as a real estate investment property broker. Being able to develop a professional and personal relationship with your lender makes an impression that lenders don’t often forget. Connecting at trade shows, checking in on potential guideline changes, even if you don’t have a deal to present, and taking advantage of everything your lender has to offer brokers are all ways to forge that relationship.
Continually working with a specific lender allows you to become familiar with their processes, guidelines and what they will need from your client on a deal-by-deal basis. The more you work with a lender the better you can get at providing rough estimates of terms. This typically excites the client and pushes them to be more engaged if they know what type of deal they could potentially get. You will become used to their process allowing you to expedite closing by providing documents as they are being requested, as opposed to learning that they are required late in the process and then needing to rush to get documents in before closing. This is one of the many examples of why it is beneficial to establish that relationship with a lender.
Fostering this relationship with a lender will also help get those fringe deals more attention and a higher probability of getting closed. If you establish a relationship with a lender, or are known to be a driving force of good business, the likelihood of getting a deal with a minor issue, such as being close on the DSCR or being slightly undervalued, will increase due to the fact you have closed previous deals with that same lender.
Being open and direct with your client is another important habit to develop as a broker. Knowing what your client is looking for and what exactly they need is a big step in the process. You can relay that information to your lender, and they will know what you should suggest to your client. This chain of communication is key because it allows you to help your client as much as possible.
Staying involved in the process is another key for successful brokers. You don’t close million dollar deals every day so embracing the struggle, always being there for your client, and taking enjoyment in fixing the little problems that come up throughout the course of the loan is a big part of success. The end goal is to close a loan, it won’t always be smooth sailing but making it to the finish line is always worth it.
Knowing the difference and importance between response time and response accuracy is another part of this habit. Getting answers back to your client in a timely manner is always crucial. Minutes and hours matter in this business, let alone days. If you can respond to your client as quick as possible, they will appreciate that. However, there is a fine line between speed and accuracy. Don’t jeopardize your reputation, or your relationship with a client, for the sake of answering a question. Make sure you are giving them the right information and not just information. That’s where your relationship with a lender also comes into play. A lender you have a good relationship with is likely to respond to you quicker if you politely let them know this specific matter or question is urgent. The use of this phrase: “I am unsure about this and want to make sure I get you the correct answer, I am going to reach out for confirmation and get back to you by (insert reasonable time),” is one all successful brokers have used throughout their career.
The last piece of the communication puzzle is being able to lead conversations. Even if you aren’t an expert yet, use your lender as a source of information and always be the one providing the answer for your client. This will build trust with your client and they will have the peace of mind that you are a reliable source. The more you ask the lender in the first few deals, the quicker you’ll learn and become more knowledgeable for your clients
Make sure you set reasonable expectations and boundaries with your clients. They might have a tendency to panic when something goes awry with their loan, but chances are you have multiple other loans that you are working through. Don’t always stop everything you are doing to appease one of your clients. Help them understand what is exactly going on and the steps that will needed to be taken in order to remedy the situation, but don’t let them take control of your time and schedule.
Handling newer clients with unrealistic expectations is another obstacle that successful brokers are well versed in handling. Explaining why those scenarios are impossible and how they would not be a productive use of time for all parties involved is important for brokers.
Take confidence in the fact that they hired you for a reason. You are the experienced broker, not them. A lot of newer investors need this guidance, but even experienced investors need guidance when using financing for the first time or dealing with new lenders with new requirements and guidelines. Step in when needed and always try to show your value to your client and let them know you have the skills and knowledge to help them get the job done.
These habits are some of the most important that any broker can pick up. There will be more tips and good practices to come, so stay tuned for more articles from RCN Capital.
Nate Zielinski, Junior Business Development Coordinator, joined RCN Capital in the Fall of 2020. He will add his ambition, communication skills, teamwork, and public speaking ability to RCN’s Business Development team. Nate’s goal as a member of the Business Development team will be to recruit new, long-lasting business relationships with brokers and borrowers as well as maintain the strong relationships RCN Capital already has in place. Nate’s prior work experience includes sales, advertisement, copywriting, and social media. Nate graduated from the University of Connecticut in 2015 with a Journalism degree and a related area of study in Communications while working for the school newspaper and radio station.