Should I work with my own lender or turnkey recommended lender?

Question

Hello, Biggerpockets community of investors, Im working on my first deal with a turnkey company. The agent  gave me some recommendations of preferred lenders even though I told her I'm already working with one.  She said they would prefer if I'd work their preferred lenders. I didnt think much of it, and moved on. I figured yeah, you have your choice but I can choose my lender too right? I've had my lender send the required preapproval letter, and thenthe turnkey agent told me to work with her lender instead. I told her Ive already started the process, dont want to start over and delay getting the property. She told me she will hold the property for me if I agreed to work with her lender. Is this a common practice, or even ethical? Should I run? Not sure what to do now? I appreciate your advise, as Im so new to all this.

AJ Singh · Answer

@Sheilla Vidal

Have you checked the MLS comps and made sure the turnkey price is market and not over. The appraisal always plays a role in execution of the loan.  i would use their preferred lender if the terms are better than your lender .

Please make sure the property you are buying is rehabbed as listed. Make sure you take a trip to Ohio and visit your property. Seen too many threads on BP about bad real estate experiences.

Best of Luck

Johnny Wolff · Answer

Yeah - if you really want the deal - I'd just go with their lender.  You already have all the documents and it won't take nearly as much effort this time around.  The "hard" credit hit really doesn't materially affect your credit (like a point or two typically - and sometimes not at all).

If you're even looking for props here in KC or DFW hit me up.  Happy to chat :)

Alex Olson · Answer

If they won't work with your lender I would run away. Sounds fishy. That is unless you are getting an amazing deal and you have bad credit. Any reasonable seller knows that you are probably going to want your own lender. Hope that helps!

Johnny Wolff · Answer

Hey @Sheilla Vidal - that's a bit strange.  We have a list of recommended lenders at HomeRoom, but we're fine when folks choose to use their own lenders.

Agents are not allowed to receive compensation for referring to lenders but we do HIGHLY recommend investors use them because having a trusted lender makes the whole process go so much more smoothly for everyone and lenders who aren't experienced in the RE investment space lose deals because they are not able to solve investment-specific problems quickly enough.

Do think they should have given you the "why" - sounds like that might have been lacking.

Sheilla Vidal · Answer

Thank you @Johnny Wolff. I did try to call the agent to ask for the "why" but she was unavailable. Its good to hear that perspective, and definitely would want to build relationship with different lenders as well.

Incidentally the turnkey company Im working with has properties out their in your neck of the woods, and OH. The property Im looking at is in OH and the numbers look really good. I'd hate to lose this deal for sure.

Should I work with my own lender or turnkey recommended lender?

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