47 – Jimmy Moncrief

c26a8421e2b20ad8976f18.L._V151602445_SY470_In this episode, I interview Jimmy Moncrief. Jimmy is a bank underwriter and a real estate investor. He has a blog at realestatefinanceHQ.com, where he talks about all things real estate finance.

Jimmy got started in finance at a very young age. He revealed on the show that he won a stock market competition at the age of 12! Now that is starting young!

His first job was as a stock analyst at a hedge fund, which was his dream job at the time. That was when he and his wife bought their first house. After purchasing the house, they saw that a house across the street was listed for sale and was a fantastic deal. He and his wife decided to rent out their own house, and move into the house across the street. This is how Jimmy got his start in real estate investing. He loved having the passive income from his rental every month. Although there was some work involved, it got the real estate investing fires burning inside him.

When I asked Jimmy what mistakes investors make when they approach institutional lending sources such as banks, his first response was that people get the process backward. He was very passionate about his stance on how a real estate investor, or any investor for that matter, should approach a bank. Most real estate investors find a deal, get it under contract, and then go to the bank for a loan. According to Jimmy, this process should be done the other way around. First, establish the relationship with the bank and secure the financing at least on paper. Then you can go out with confidence and find deals knowing that you will be financed and knowing upfront what the rates and the terms will be.

During the interview, Jimmy challenged my listeners to do an exercise that can be done today. Here it is:

Make a list of ten financial institutions, consisting of:

  • two credit unions
  • two community banks
  • two regional banks
  • two national banks
  • two hard money lenders

Once you have your list, call them and ask for theirĀ business banker/commercial loan officer. Once you’re talking to the business banker, introduce yourself, and simply ask them what kinds of loans they’re looking for. Jimmy advised that you don’t even tell them your business plan up front. He also suggested that you ask them what kinds of loans they are staying away from. You should look at it as though you are interviewing them, not the other way around.

We also talked about the five C’s of credit:

  1. Character
  2. Capacity
  3. Capital
  4. Collateral
  5. Conditions

Finally, we covered the subject of portfolio loans. I know portfolio loans are a hot topic in real estate investing, and I think you will get a lot out of what Jimmy has to say about these types of loans. Check out the show and find out if a portfolio loan is right for you!

Links

realestatefinanceHQ.com – Jimmy’s website where he talks all things real estate financing

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