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Updated over 4 years ago on . Most recent reply

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Matthew Metros
  • Investor
  • New York, NY
28
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94
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Do I need to find a lender in the local market?

Matthew Metros
  • Investor
  • New York, NY
Posted

I am looking at multifamily investment opportunities in the San Antonio, Fort-Worth, and Austin areas. I am currently looking for a lender and I am wondering if it is advantageous to have a lender in each market.

I ask because financing seems to be nationally driven rather than market driven. So my point is that why would I need to have a lender in the exact market. If a lender is in Manhattan and he finances my deals in Texas, is there any downside? Is there a gap in my logic?

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David Ivy
  • Real Estate Broker
  • Austin, TX
689
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331
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David Ivy
  • Real Estate Broker
  • Austin, TX
Replied

@Matthew Metros

Suppose that you're a seller in Austin considering identical purchase contracts from two different buyers. One buyer's lender is based in Manhattan. The other buyer's lender is local to Austin. Even better, your agent has had positive experiences with that lender in past transactions. With the lender being the only substantial difference between the two buyers, which offer would you select? If you would go with the local lender, think about why you feel drawn to that lender over the out-of-state lender.

When evaluating offers, sellers (and their agents) don't focus solely on a buyer's offer price and other specific contract terms. They're also asking questions like, "How likely is this buyer actually to make it to the closing table?" and "Will the transaction go smoothly with this buyer, or will it be fraught with drama and uncertainty?" There are many ways for a buyer to address those and similar questions when making an offer. The choice of lender is one important component.

Multifamily properties in the Austin area commonly receive multiple offers from qualified buyers. It can get extremely competitive. I've personally seen several multifamily properties in the Austin area receive 20+ offers this year. I know San Antonio can also be very competitive. If you want to do everything you possibly can to succeed, then I recommend working with a local lender. You might not need one in each market, but having one based in Texas can give you an edge over other buyers with out-of-state lenders or big national banks.

  • David Ivy
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