Is There Something I'm Just Not Getting?

Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes

I'm not sure why she would decide so quickly to not work with you, but at this point, I wouldn't try to convince her otherwise. It won't help.

But I would suggest going into local banks in person, even if to just drop in to make an appointment. I think that can make a much bigger difference. I experienced much better response going in person vs emailing or even calling banks.

6 Reply

Steve DellaPelle

Rental Property Investor · Salem, NH · Member since 2016 · 460 posts · 276 votes

8y

I have worked with great lenders and I have worked with not so great lenders. Point being, lenders are not one in the same...they vary. Move on and find another lender...potentially a referral from someone with experience.

Best of luck!

1 Reply

Alexander FelicePro Member

Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes

8y

well first of all, not all banks are going to want to lend on what you want. Just the nature of business, I'm a banker myself and we turn down plenty of good opportunities for all sorts of reasons. Getting into the details of why isn't always productive, the only thing that matters is finding the lender that you have aligned goals with.

Is this the only bank you have reached out to? Other banks will have different answers. have you gotten any recommendations from locals? Have you tried any brokers?

[email protected]Podcast Guest on Show #301

3 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Nicole A.

I think you're absolutely right. I'm just trying to do my homework in order to not waste anyone's time.

But I'm also of the school of thought that if a loan officer can't be bothered to give you a quick summary of what they look for and what they offer, they aren't really the kind of lenders I want to work with.

Would reaching out to a different loan officer in another branch be inappropriate? I'd hate to think that one employee speaks for the entirety of a company.

@Alexander Felice

Completely agree. That was the purpose of this initial inquiry. To see if our business and the bank both work for each other. The line of questioning was to save everyone involved time rather than waste either parties time.

This bank was a recommendation from a local investor. It is indeed the first bank I've spoken with, but will definitely not be the last. I'm just trying to figure out what I should reasonably expect and how I should approach these lenders.

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Omar Khan

Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

8y

@Brian Wilson First of all, great name (Beach Boys, anyone?)

Secondly, you don't have to waste your time with such lenders. Going by your post only, she could have told you the same thing but in better words. It's all about customer service and there are better ways to deal with the situation than being curt and rude.

What niche are you looking into - SFRs, small MF, larger MF, self storage, etc?

You can search the forums/site to get a better idea of the lenders in your area. I would also suggest attending your local REIA (be cautious of sales gurus) to network with local investors. They can give you the inside scoop as well as offer solid referrals.

Best of luck!

1 Reply

Mike H.

Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes

8y

I think sometimes email communication can create unusual tones that aren't always there.

My take over the years has always been to push back on the banks that say now and get some details.
I really want to know what they're thinking and why.

The lender rep says that "we require the whole relationship with our customers". I would tell her that you would like to better understand what that means and if she can give an example of how they would typically bring a new borrower into the fold.

I'm reading something into that "whole" relationship to where she may be hinting at you setting up a bank account with them. That tends to be a requirement for many local banks. At the very least, I would definitely follow up with her. See if there's a disconnect somewhere. But ultimately, its about learning whether the bank simply doesn't do the loans or if they do, why they won't do them with you.

That reply given there tells me nothing in terms of how they came to that decision.

I've been told no for all kinds of reasons in the past. But I will always push back and ask for an explanation in cases where their answer is vague or just doesn't make sense. And even if I understand their explanation, I will still push back and tell them their logic doesn't really make sense.

I was just told no for portfolio/commercial loans on sfh's by Huntington bank here in Illinois. They did a heloc 100% on my primary residence for me. And then the very eager and senior banker said they could do these investment property loans for me too. It was a yes, then a no, then a yes, and then back to no.

Finally, I got an answer that they will do investment property loans but not for me because they were afraid of how many properties I had. So basically, if I was someone with 13 or 14 houses, they would do loan number 15. But because I had 68 houses, I was apparently too big a risk.

I told the commercial guy direct - that makes zero sense. I can understand when a bank says they won't do portfolio loans for SFH's. Some just don't do them. But why in the world would they take someone with less experience as an investor than someone who has a lot more. The logic of it made no sense and I recommend telling them so. They'll actually remember you for calling them out. And maybe something will change in the future.

At the very least you can vent a little on someone that deserves it.

I'm a firm believer that banks are sheep. Anybody that can justify subprime loans is either stupid or a crook - but its one of the two.

4 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Omar Khan

I hear that one with some frequency lol.

I don't mind being blunt. Honestly it saves me time. What I don't like is how she positioned her response and that I had to ask others (BP community) to confirm the inferred reasoning. I like clarity and brevity. While I'm a big fan of being professional and kind to how I interact with others, I don't necessarily expect the same. I've been following Gary V. for a while and he constantly talks about the 51/49 rule and it's honestly something I've really resonated with and adopted over the last year. Hence my indifference toward the emotional side of her response, however, I do want honesty and clarity in all interactions which is why I was conflicted about this entire situation.

The niches I'm focused on are SF for two different businesses I have a partnership in. The first one is focused on buy and hold SFR. While the other is focused on SF flips and wholesales. I'd eventually like to get into large MF syndication (506(b) focus), but I'm still young and I'm more of an observer of that realm than an active, and would like a sizable portfolio to replace my income so I can go full time into MF syndication in a decade or so.

I'm also looking into house hacking duplexes in my area.

I'm hunting around the forums for that information.

I'm trying to be more aggressive lately (reaching out to lenders), as I recently stumbled upon fund and grow, and while reviews are relatively mixed about the service I really want to get as much financing as possible during a good economy, that way I can take full advantage of the next downturn. So I'm seeing what banks can do in comparison of going with a strategy like fund and grow implements.

Thanks for the input!

1 Reply

Account Closed

Riverside, CA · Member since 2017 · 412 posts · 296 votes

8y

Originally posted by @Brian Wilson:

Afternoon BP!

Bottom line up front:

I reached out to a local bank, sent an email inquiring about loan services for REI. Loan officer responded saying that they didn't feel it would be a good fit, and that this is not how they form one on one relationships. The rest in detail is below.

Fairly new at all of this, and recently reach out to a bank in my local area to inquire about their loan products for REI.

Sent them a contact us form through their website and received a voicemail 2 days later from a loan officer. She stated that she sent me an email yesterday and decided that she would call today since she had not heard back. I never got said email, and honestly got more of a feeling that she never even sent one at all.

However, after looking her name up on the banks website I reached out to her via her company email with the subject referencing the voicemail. In the email I thanked her for calling me back the other day after she hadn't heard from me and I appreciated this level of customer service. I then went on to tell her what we were looking for, and wanted to see what they as a lender offered for these types of projects. I asked what they typically looked for when lending and what parameters they typically operate on (70% LTV/ARV, etc.).

I also stated that we were looking to form a long term relationship with a local bank that is a good fit for our business.

I received the following email from her today:
"We do quite a bit of real estate lending. However we require the whole relationship with our customers. I appreciate you looking into what we can do however I don’t think that this would be a good fit for how we develop one on one relationships."

I want to respond, because I don't like the sound of that. However, I feel as though she has this perspective because I didn't call her and wanted to get an initial inquiry of the information (what programs they have) so I can discuss with my business partners, prior to setting up any meetings or further discussions.

Have you ever run into any issues of this nature when looking at potential lenders? All advice, comments, speculation welcome.

Thanks!

Perhaps you came across as a newbie and they only work with experienced accredited investors. It's their money. They will set the rules who to lend to and why.

0 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Account Closed

You may be correct! That's exactly why I asked for their criteria as what they look for when lending as well as their typical terms, I didn't want to waste anyone's time.

Life is long, and the newbie today is a veteran 25 years from now. Therefore, I would think you'd at least take the time to elaborate on what you as a bank are looking for.

1 Reply

Ben Leybovich

Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

8y

Hah Let me translate this for you...

Dear newbie buyer,

Since BP has created an army of your clones, lenders like me are plenty busy writing paper. So, unless you are willing to stand out, see ya...

Now - the question is - are you willing to stand out :)

5 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

8y

Ask questions (and build a relationship) the old fashioned way...have a conversation.

1 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Ben Leybovich

Haha Respect man. You're absolutely right about the army of clones BP has created.

To answer that question though, I absolutely am willing to go above and beyond for the right lender.

However, no matter how busy you are, if you get too fancy to summarize what you are looking for to a potential client, or even attach a lending brochure that you may have already on file then I honestly don't want to work with you.

Let me explain. I recently changed careers. I get 2-3 emails a day from recruiters in my previous line of work. I respond to every single email, because I know they took the time out of their day to reach out to me (or they just threw me on their distro). Do they stand to gain something? Sure. It provides me with next to zero in value, but you know why I respond to every single email I get from them? Because It takes less than a minute to respond and just maybe, some day I'll decide to go back into that line of work and effort and being kind is ROI positive.

However that's just my personal opinion. You truly learn what someone is about by how they react when they don't have a direct line of sight to how they profit.

Thanks for the translation though Ben, you confirmed part of my theory!

0 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Mike Dymski,

Totally agree with your view. I'm not adverse to discussing the details further on the phone or even setting a meeting. Email was just an initial inquiry into what they offered to determine if that next step was a good idea. It allows me to better formulate questions, collect the information, and in my opinion more effective for gathering the bare bones basics for me as an individual. You can answer email on a time table that works for you.

Thanks for the input!

0 Reply

Ben Leybovich

Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

8y

Originally posted by @Brian Wilson:

@Ben Leybovich

Haha Respect man. You're absolutely right about the army of clones BP has created.

To answer that question though, I absolutely am willing to go above and beyond for the right lender.

However, no matter how busy you are, if you get too fancy to summarize what you are looking for to a potential client, or even attach a lending brochure that you may have already on file then I honestly don't want to work with you.

Let me explain. I recently changed careers. I get 2-3 emails a day from recruiters in my previous line of work. I respond to every single email, because I know they took the time out of their day to reach out to me (or they just threw me on their distro). Do they stand to gain something? Sure. It provides me with next to zero in value, but you know why I respond to every single email I get from them? Because It takes less than a minute to respond and just maybe, some day I'll decide to go back into that line of work and effort and being kind is ROI positive.

However that's just my personal opinion. You truly learn what someone is about by how they react when they don't have a direct line of sight to how they profit.

Thanks for the translation though Ben, you confirmed part of my theory!

The thing is:

Not only did you take the time to write this post, but you are still thinking about this! This is a people business. There's chemistry involved. Obviously the rational thing here is - move on, and do something a bit different next time.

You see, Brian, the first and most important step in any success is to take responsibility for everything. Even in times when it's not clear how what happened was a response to something you did, it was a response to something you did. And there is a lesson in it for you. In fact - the only reason it happened in the way that it did was because you needed to learn something.

What are you going to learn :)?

4 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Ben Leybovich

You're absolutely right. Thanks Ben!

0 Reply

Andrew Johnson

Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes

8y

@Brian Wilson So maybe a couple of thoughts here:

1.) It's really, really, REALLY hard to build up any relationships via email. It's so darn easy to spam out emails to 50 people that it has to be tough who to decide to spend time with. So few people will bother to pick up the phone, it's crazy. But that aside...

2.) I'd imagine BP (and other REI podcasts, etc.) have created an army of folks that want to set up an LLC and financing based on ARV or something else that's a little less tangible. That's a materially different conversation (in my view, who knows, lenders might have their own thoughts) than: "I have $200K sitting in a bank and I'm looking at an $800K 6-plex that's for sale 2 miles from where your office is, do you offer commercial loans at a 75/25 LTV and what are typical interest rates, fixed periods, and amortization schedules?"

2a.) I know my commercial lender wanted to know why I was investing in that area, the connection to the area, my timeline, blah...blah...blah. I was open and honest about all of it. He also knew my property manager, was able to visit the property in question, knew who the original builder was, etc. Consequently, it let him (and presumably the loan committee) get comfortable with me, the property, how it would be managed, the reasonableness of my pro-forma, etc.

3.) All of my commercial loan conversations came from referrals through a realtor or property manager. You get the name of someone at a bank (rather than a department) and your initial call or email is "I got your name from Jane Doe who recommended I call you based on work you've done with her clients before". If "Lender A" wants to keep getting referrals from "Jane Doe" then you'll get a call back.

4.) As @Mike H. mentions, some local/community/etc. banks really, really, REALLY want you to house their money with them if you're going to get a loan through them. Mine doesn't but I've heard the story more than once. And, to be honest, if mine wanted me to put money in there (like reserves for the property) and have deposits go in an out I'd probably do it. No skin of my nose if they aren't going to charge me maintenance fees, etc.

5.) Most banks do have some kind of allocation of how they want to use their capital. Meaning they can loan for multi-family apartments, maybe SFR portfolio, office space, retail, business loans, etc. If their portfolio skews too heavy in one direction it can mean just backing away from that "sector" as a way to mitigate risk in their portfolio. Which makes sense since these guys are carrying the paper themselves.

2 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

8y

Originally posted by @Brian Wilson:

@Mike Dymski,

Totally agree with your view. I'm not adverse to discussing the details further on the phone or even setting a meeting. Email was just an initial inquiry into what they offered to determine if that next step was a good idea. It allows me to better formulate questions, collect the information, and in my opinion more effective for gathering the bare bones basics for me as an individual. You can answer email on a time table that works for you.

Thanks for the input!

Yep, we get it and we are trying to help you understand that it unfortunately does not work that way. I could provide a long list of reasons but it primarily revolves around (1) the complexity of their product offerings and (2) relationship building.

Give them a call, tell them what are planning to do, and find out their product offering and appetite for your type of real estate...and their appetite for you.

You can get lender referrals from other investors, brokers, agents, BP members, meetups, REI meetings.

1 Reply

Brian Wilson

OP

Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes

8y

@Mike Dymski

Thanks for being patient in explaining your view.

After reflecting on what everyone in this thread has said it seems that while there are lenders out there that will correspond via email the way I want, there is a much larger percentage that want the initial interaction to be over the phone or in person.

I'm still learning to get out of my own way.

Thanks for your input Mike!

1 Reply

Adam Odom

Columbia, SC · Member since 2014 · 133 posts · 190 votes

8y

@Andrew Johnson is right. I work for a bank and we are really cooling on investment property just like we have on hotels and multi family because of amounts on the books. Good banks don't over saturate in one area. Also me personally, if you did a web inquiry then responded to a personalized phone call with another email by searching a directory I'm thinking either something is fishy or you are shopping a ton of banks. Even still there is no "box" on commercial/investment lending so it can't be a generic canned response via email. If we did do REI right now, it would only be in the banks footprint and there are many other factors to consider. Too many to put in a boilerplate email for sure.

2 Reply

Nichole B.

Normal, IL · Member since 2017 · 38 posts · 20 votes

8y

A BP podcast that I listened to today impressed on me the "courtship" that happens when meeting with lenders. Go to BP Podcast #124. The whole thing is a good one, but for this topic, go to minute marker 29:00 (on the YouTube video version). The guest, Jered Sturm, got a lender on board simply because he sat down with the guy, showed him his portfolio, and spent a half hour chatting with him (i.e. developing a relationship) wore a tie to his meeting with the lender. The banker was on board because he made a professional presentation, and because he wore a tie. Brandon T. then explains the steps he took to impress a banker to secure a loan, which included creating a portfolio to showcase his experience and to show why the property was a good deal.

I think a lot of times, especially with the emphasis on digital communication now, people can overlook the importance of interacting in person and putting forth an effort to put their best foot forward. I did think that her reply to you seemed snooty, but there are a hundred more lenders to woo :-)

3 Reply

Ian WalshBusiness Member

Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

8y

Banks take years to crack a lot of times.

0 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes

8y

Originally posted by @Nicole A.:

I'm not sure why she would decide so quickly to not work with you, but at this point, I wouldn't try to convince her otherwise. It won't help.

But I would suggest going into local banks in person, even if to just drop in to make an appointment. I think that can make a much bigger difference. I experienced much better response going in person vs emailing or even calling banks.

This is my experience as well, and is also a reason I've got banking accounts & relationships with 5-6 banks at any one time.

Podcast Guest on Show #243

Skyline Properties

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Is There Something I'm Just Not Getting?

Is There Something I'm Just Not Getting?

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