Page 183 - Trump University Commercial Real Estate 101

Use a Money Multiplier

Take Advantage of Several Financing
Sources Available to You

It ’ s crucial that you understand that last point about making your
money work as hard as you do. Of course, you may not be in a position
right now even to consider buying a property with all cash. Let ’ s look

at all the options you have for financing your deals.
Local Banks

In this category I ’ m including commercial banks and savings and loan
companies. Even though these are the boring, traditional sources of

financing, sometimes they are your best choice. Local lenders like to
loan to people and properties right in their area. They ’ re very familiar
with property values and in some cases may need less convincing.
Local banks are good to use for repositioning projects. They typi-
cally have favorable construction loan terms and like to do business
with people they know. If you are investing in areas outside of your
home base, I suggest you set up a meeting or lunch with a local lender
whenever you are in the area. The better they know you, the higher
the probability that you will get the loan.
Local banks tend to have shorter loan terms and slightly higher
interest rates, which makes the payments higher on these loans. This

means you will be sacrificing cash flow. If you have a deal that is some-
what tight on the numbers, it ’ s worth considering a national lender or
conduit lender.

National Lenders

Most of these lenders have very precise lending criteria to judge their
loans. That is because they intend not to hold those loans, but to sell
them on the secondary market very shortly after the loan closes.
The main secondary markets are Freddie Mac and Fannie Mae . These
are government - sponsored — but not government - guaranteed — buyers
of loans. These loans usually have the lowest interest rates available.

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