Lender won’t lend

[Christopher Symenow]

I have been looking to get into MF properties in Watertown NY.  I had some interest in a few in the city proper but when I asked for a pre-qualification letter from my typical lender they said that they wouldn't lend on the properties I was going to look at due to the area and risk to them and me as the homes don't really appreciate in the city and much of the tenants are often times troublesome and risky.  Is this a common concern with lenders anyone has experienced?  I'm following their lead, if it's too risky for them then it's too risky for me at my stage of the game and will continue investing where I'm familiar with and doing well.  Thanks!

[Pierre Guirguis]

A lot of banks just won’t touch certain areas or tenant profiles, especially if appreciation is flat or the market is considered “tough.” That doesn’t mean the deal itself is bad, it just means it doesn’t fit their box.

There are plenty of lenders that will still finance those kinds of properties, they just look at them differently. Some care more about in-place cash flow than appreciation, others are used to working in secondary markets.

Where people get tripped up is assuming one lender’s “no” means the deal is a no. That said, your instinct isn’t wrong either. If you’re early on, staying in markets you understand and can manage well is usually the better move, but I wouldn’t write off the entire area just because one lender passed. It’s more about matching the deal to the right financing.