I am a new investor in 757 area code of Virginia. I'm developing my plan and I'd like to get some thoughts on how to look for a good local bank? What are some of the questions I should ask? How useful can using just one bank be? I want to use good relationships in my investing. I want to have a honest relationship with a financial institution.
I think just use common sense and go to different local banks. I like the idea of local banks and building a relationship. I'm planning to do that myself, and I will make sure I have all my financial information summarized in a page or so when I do that.
G talk to bank loan officers.just walk in and sit down and start talking. Explain to them your plans. Ask about their loan-to-value limits some local banks will go as high 95% ltv some are low at 75%, but will finance ANYTHING that appraises. On that note, ask if they do in house appraisals. In house appraisal is basically a loan officer drive by. It doesn’t cost near as much and is much more likely to garner the result you are looking for because they know your price and where the property needs to be for the loan to work. Ask them if they will do leverage deals, and if they have done very many. Most of the time at a local bank your loan officer is basically your sales guy, because they take your pitch to the board that actually approves or denies the loan. If you don’t think they can do it move on to the next one.
@Christian Drake You can do the things suggested so far or you can skip those steps that may take days and just take an investor or two in your area out to lunch and ask what banks he or she uses to finance their rental properties. I spent days trying to find local banks and I had to speak with tons of people at the bank who knew nothing about investing trying to find a loan officer who was savvy working with investors. Then I just asked other investors how they got multiple loans for properties and they gave me their specific banker's name. I wish I had done this at the beginning and saved myself some time.
@Shiloh Lundahl that's great except, if you don't talk to them and shop around you have no clue if you are overpaying on rates or getting screwed on LTV. I still suggest spending a few days talking to loan officers.
@Dustin Lavender who would be the one screwing you on the LTV? The bank referral that you got from another investor? If you trust the investor, hopefully they will give you a good referral. By all means, you can spend your time shopping around.
@Shiloh Lundahl you would be screwing yourself. It might be a great referral, but if you need a higher LTV than what that bank offers, you would be better off to shop around. Or you could go to the first one someone suggests.
Thank you both I will use both strategies to get the biggest picture.
@Christian Drake I was using ABNB FCU with 10% down and 5/5 ARM 3.75% but they did away with that program in June this year. I cannot find another deal like that so my next best thing has been dealing with Wells Fargo. They have offered 15% down 4.75% 30 year loan. Not great, but that's the best I've found around Norfolk.
If you have something better I'd love to hear who you're using.
@Christian Drake All good points above. When looking for a lender, approach the meeting with the mindset that you are looking for a partner. Someone who understands your business/goals and will represent your interests to their approving authority.
Every lending institution has good lenders and less good lenders. Find a good one (or two), and hold on to them. They may end up changing institutions over the course of their careers so their individual acumen is often more important than the business name on their card.
A great lender at an institution with little resources will get you access to everything they have to offer.
A bad lender at a great institution will only prevent you from enjoying the full use of their resources or worse: Sell you things that hinder your progress.
Hope you find a good one!
I agree with Shiloh Lundahl. Find your local REIA, sit down with investors in your area, get some refs on people/banks they are using. Save your time and weed through the pitch guys who only talk terms. It is the “loan office” that decides the deals.
A point here or there makes no difference starting out. Most loans never last past a few years anyway. Find the institution that will work with you, based on your circumstances and needs.
Be open and aware that most calls to banks are time wasters. A loan has many more layers these days. Lots more to review and verify. Do the work now to be ready later. Best of luck to you.