Ever take a look at someone’s social media page and wonder how their life could be so perfect…sunsets on vacation, skydiving, food and drink with good friends. The truth is, no matter how perfect it looks, you only get to see the good parts. The screaming kids, the cranky spouse, and the traffic jams never quite see the light of a social media day.

Business can be the same way, and I’m as guilty of it as anyone. You see the pictures of me standing in front of a finished subdivision or read about the sale of a piece of my rental portfolio and you see the success.

What you don’t see are some of the bumps in the road that happened along the way. For example, 15 banks turned one of my most important projects down. That’s right. Fifteen times I stepped up to the plate, swung and missed.

Those failures, however, led to two of my greatest lessons in real estate development. First, it is critical to have close relationships with your banking partners. Second, it’s important to always keep building your network of business and community contacts. You never know what relationship will unlock an important door.

When I was partnering with Harpeth Development to build Solo East, an affordable condo development in East Nashville, financing was difficult to come by. We saw a need for high-quality new housing that would appeal to working-level professionals. The problem was banks only wanted to fund apartment developments. I was having a difficult time getting people to buy in to the vision of high-quality affordable housing.

Fortunately, a networking initiative I’d been working on that had absolutely nothing to do with banking helped open some doors. I was working with Community Baptist Church of Spring Hill to organize a Thanksgiving food drive in a poor county in rural Kentucky. We delivered over 1,000 meals and brought a happy Thanksgiving to a lot of families.

In the course of working on that initiative, I got to know a gentleman from Franklin Synergy Bank. Much to my surprise, he said, “Bruce, if there is ever anything I can do for you, let me know.”

That sixteenth meeting turned into the financing we needed. Solo East sold out, East Nashville became a quickly rising part of town and I, my partners and Franklin Synergy Bank all did well.

The lessons learned…never, ever give up on a good idea. Keep doing good things in the world, and never underestimate the power of building your network. Good things will happen.

That said, I don’t ever want to go 1-for-16 asking for a loan ever again. Over the last several years, I’ve developed relationships with multiple lending partners. I’ve worked hard to raise the profile of my business, so that these partners recognize I have a solid track record. Now, when I seek financing, I establish my own terms, shop them around to multiple lenders and let them fight for my business.

I’ve also developed some go-to partners who have been instrumental in my success. CoreVest, for example, has been a Godsend to Kinloch Partners. The company does a lot of short-term, fix-and-flip loans with reasonable rates and air-tight closing processes. They are perfect for an investor or developer with a limited number of homes to purchase. Many hard-money lenders see a small investor coming and jack up the rates. CoreVest has always shied away from this practice.

Where does an aspiring real estate investor or developer begin? I always start with a bank where I’m an existing customer. If you have even a small account, they will be more likely to give you their time and more importantly, their money. Another great source when starting out are Credit Unions. If you are a member, they are easy to deal with and generally speaking, have great rates.

As you grow, it’s important to treat lenders professionally and respectfully to grow mutually beneficial relationships. It’s not always easy in the early stages – my 1-for-16 performance is a great example. But, as you grow as an investor and as you strengthen your relationships with funding partners, you will very likely find that banks and credit unions can become a source of strength for your business.

Bruce McNeilage is the managing member and a co-founder of Kinloch Partners and a partner in Harpeth Development.. He is a passionate advocate for housing affordability and homeownership, and invests heavily in Nashville, Tennessee, as well as throughout the southeast. Learn more about his projects, including single-family built-to-rent communities and the Solo East and North condominium projects at www.Kinlochpartners.net.

Categories | Article | Funding
Tags | Capital
  • Bruce McNeilage

    Bruce McNeilage is the CEO and co-founder of Kinloch Partners and a partner in Harpeth Development.. He is a passionate advocate for housing affordability and homeownership and invests heavily in Nashville, Tennessee, as well as throughout the southeast. Learn more about his projects, including single-family built-to-rent communities and the Solo East and North condominium projects at www.Kinlochpartners.net.

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