Outsourcing Your Non-QM Investment Deals – Giving Up the Headache without Giving Up the Revenue

By A. I. Lendberg, Edited by Douglas Katz – 05/18/23

Full disclosure, I am a lender with a focus on investment real estate but I also have done and continue to lend in the residential market.  I have seen and experienced this first hand and I have seen the chaos it can cause.  I know what is involved with both sides and I myself have made the mistake of chasing the next great program when business gets lean.  When I deviated from my core relationships and business for the “next big thing”, it did not necessarily turn out as expected. In fact, it usually cost me in current and future business.  The good news is that there is no need to turn these deals away and you can still get paid with a strategic partner.

Navigating the non-conforming non-conventional investment real estate lending marketplace can be a complex and challenging endeavor. As a struggling mortgage lender or even one that just wants to add a revenue stream, you may find yourself weighing the pros and cons of going solo versus partnering with a knowledgeable non-QM mortgage broker. There are many reasons why having a strategic partner makes sense and considering factors such as resource cost, time efficiency, program variety, flexibility, and expertise in the non-standard world of non-qualified mortgage (non-QM) lending is essential to deciding your course of action.

Resource Cost

Non-conforming non-conventional investment real estate lending requires a myriad of resources is required to ensure successful transactions. By partnering with a non-QM mortgage broker, you gain access to their established network of lenders, appraisers, and legal professionals. These connections not only save you the time and effort of building relationships from scratch but also potentially unlock exclusive deals and favorable terms. Moreover, the costs associated with marketing, compliance, and technology infrastructure can be shared with or even bared by your strategic partner, reducing your financial burden.

If you choose to handle the lending process for your clients yourself, you may need to invest substantial time and money into establishing connections and finding reputable lenders.  Lenders and their offerings are always changing in this space, so it is especially difficult to manage the sources as a side of your desk endeavor.  This can delay your deals and potentially lead to unfavorable terms or higher costs for your clients due to limited access to the best loan options in the market.

By partnering with a specialized mortgage broker, you gain access to their established network of lenders, appraisers, and legal professionals, saving you the time and effort of building relationships from scratch. This network can potentially unlock exclusive deals and favorable terms, ultimately leading to a more cost-effective financing solution for your investment project. Also do not forget that it YOU do the deal yourself, you own it and your reputation can take a hit if things go badly.

Time Efficiency

One of the most valuable commodities in the investment world is time. Conducting due diligence, sourcing deals, and managing the loan application process demand significant time and attention to detail. A strategic partner well-versed in non-conforming non-conventional lending can streamline the process, leveraging their expertise and experience to navigate potential hurdles efficiently. They can handle paperwork, engage with lenders, and stay on top of evolving regulations, allowing you to focus on your core business or even identifying lucrative investment opportunities versus trying to build relationships and infrastructure to fulfill deals.

Without a strategic partner, you may find yourself spending significant time and effort on due diligence, sourcing deals, and managing the loan application process. This can distract you from focusing on identifying new investment opportunities and lead to delays or missed opportunities due to insufficient knowledge of the intricate lending landscape.

A strategic partner well-versed in non-conforming non-conventional lending can streamline the loan application process, leveraging their expertise and experience to navigate potential hurdles efficiently. They can handle paperwork, engage with lenders, and stay on top of evolving regulations, saving you valuable time and ensuring a smooth and timely closing for your investment.

Variety of Programs

The non-conforming, non-conventional lending marketplace offers a broad range of loan programs tailored to meet diverse investment needs. Partnering with a mortgage broker provides access to a vast selection of financing options, including non-QM loans, fix-and-flip loans, bridge loans, and portfolio loans. These specialized programs often come with flexible underwriting guidelines and customizable terms, giving you the ability to structure deals that align with your investment objectives. A strategic partner can help you navigate through these programs and select the most suitable financing solution for your specific investment scenario.

Without a strategic partner, you may have limited visibility and understanding of the various non-conforming non-conventional loan programs available. Remember the non-QM market follows a completely different set of rules and guidelines than the conforming, conventional market.  Learning and keeping up–date of the offerings is challenging.  Where the conforming market has consistency, this market does not.  This can result in missed opportunities or suboptimal financing solutions that do not fully align with your investment strategy.

Partnering provides access to a wide selection of loan programs tailored to meet diverse investment needs. These programs, such as non-QM loans, fix-and-flip loans, bridge loans, and portfolio loans, offer flexible underwriting guidelines and customizable terms.  With a strategic partner’s guidance, you can leverage these options to structure deals that align with your investment objectives, ultimately maximizing your returns. You can assume that they have already spent a lot of time gaining access to the best programs and have discovered which lenders are smoke, mirrors and frustration.

Flexibility

Unlike traditional lending institutions, the non-conforming non-conventional lending market offers greater flexibility in terms of eligibility criteria and property types. However, understanding the nuances of this niche market requires a deep understanding of non-standard lending practices. A strategic partner brings the necessary expertise to assess your investment projects accurately. They can identify potential roadblocks, suggest alternative solutions, and ensure that your investment strategy aligns with the non-QM landscape. With their guidance, you can maximize your chances of obtaining financing for unique property types or challenging financial situations.

If you venture into non-conforming non-conventional lending alone, you may struggle to find lenders willing to accommodate your unique investment scenarios.  You may even find your experience is a drag on your ability to fulfil as you may evaluate programs scenarios based on your frame of reference as opposed to someone who has seen and dealt with more situations in investment real estate.  This lack of flexibility can hinder your ability to pursue lucrative opportunities or force your client into unfavorable financing terms due to a limited pool of options or even kill the deal.

Partnering with a mortgage broker who understands the non-standard world of non-QM lending can help you overcome your client’s potential roadblocks and suggest alternative solutions. Their expertise allows them to identify creative financing options, enabling you to secure funding for unique property types or challenging financial situations that traditional lenders may reject.

Experience with Non-QM Lending

Navigating the non-standard world of non-QM lending requires specialized knowledge and experience. Mortgage brokers who specialize in this niche possess a deep understanding of the intricate guidelines, loan structures, and underwriting processes involved. Their expertise can help you identify and overcome potential obstacles and make informed decisions. By leveraging their experience, you gain access to insights and strategies that can enhance your investment strategies while mitigating risks associated with non-conventional lending.

Without the guidance of a strategic partner experienced in non-QM lending, you may face challenges and setbacks due to unfamiliarity with the intricacies of this niche market. This lack of expertise can lead to errors in loan application submissions, increased rejections, or missed opportunities to optimize your investment strategy within the non-QM lending space.  None of these are good and the ripples could impact your core business and referral relationships.

A strategic mortgage broker with experience in non-QM lending possesses in-depth knowledge of intricate guidelines, loan structures, and underwriting processes. They can provide valuable insights and strategies to enhance your investment strategies while mitigating risks associated with non-conventional lending. Their expertise increases the likelihood of successfully securing financing for your investment projects.

Giving Up Headache Without Giving Up Revenue

Having a strategic partner means freedom and increased revenue.  By working with a specialized broker you gain access to their established network of industry professionals, which can save you valuable time and effort while unlocking exclusive deals and favorable financing terms. Their experience and knowledge in navigating the complex world of non-conforming non-conventional lending can streamline the loan application process, ensuring a smooth and timely closing for your client’s investment projects.

Furthermore, the variety of loan programs available through a strategic partner gives you the flexibility to structure deals that align with your investment objectives. Their expertise in non-QM lending allows them to identify potential roadblocks and offer alternative solutions, enabling you to secure financing for unique property types or challenging financial situations that traditional lenders may reject.

Strategically partnering with a mortgage broker who specializes in the non-conforming non-conventional investment real estate lending marketplace can provide invaluable support and expertise. They can help you make informed decisions, mitigate risks, and optimize your client’s investment strategy within the non-QM landscape. By leveraging their resources, experience, and industry connections, you gain a competitive edge and increase your chances of achieving your investment goals.

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Disclaimer: This article was created with the assistance of multiple ChatGPT AI language models and has been edited and refined by Douglas Katz. The information provided in this article is intended for general informational purposes only and should not be considered as professional or expert advice. The views expressed in this article are solely those of the author and do not necessarily represent the views of ChatGPT or OpenAI. Readers are advised to do their own research and consult with relevant experts before making any decisions based on the information provided in this article.