How Did You Cultivate The Relationship With Your BEST Lender?

23 Replies

Reading @Brian Wilson 's  recent post about a lender telling him "No", it got me thinking.

How do you create a relationship with a lender? I hear this advice frequently, and also have been known to suggest it from time to time. 

But how do you actually accomplish this?

How did YOU cultivate your relationship with your BEST lender?

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

@Mindy Jensen

Great idea for a forum thread!

I found many of my lenders through my work as a Real Estate Agent. Sometimes they would come around to the brokerage. I would also ask the heavy hitter Agents at my brokerage who their favorite lenders were, and that helped me connect with some of the best of the best.

As far as cultivating...the biggest thing I did was send my mortgage lender business. 

Eventually we got so close we formed a mastermind group together with a few other key people (like our insurance agent, accountant, IRA company rep, etc) to share and build everyone's network.

Great thread question!  I've been a lender to real estate investors for 20 years.  First working for investment banks, then commercial banks, and now as a lender to single family investors.  If you want to borrow money from a commercial bank, you better get used to the "whole relationship" idea.  They want your car loan, your house loan, your credit cards and particularly they want your deposits.  It is the way they are trained.  Also, many banks don't like real estate investors.  If you are ok with the relationship idea, go find a small bank that does like investors.  If your income is spotty or your credit history is marginal or your assets are thin, you will have trouble with almost every bank.  

If you are just looking for a loan, there are specialty lenders for the real estate investor that want to start a lending relationship with you that are not nearly as picky and demanding as a bank.  

Research the lender and the loan officer, set up a brief meeting to see if they would be a good fit. You first need to know what is the main goal for your lender, is it rates, programs, timeframes? The loan officer is just as important because you can find a good lender but every loan officer is different, they work different schedules, and have their own way of doing business. Calling and speaking with a few can give you an idea if they are a good fit to work with. We do the same with realtors, just because they do business in our area doesn't mean that they are a good fit to work with. Always do your research, read online reviews, and ask questions.

I like to humanize the experience. Rapport and banter go a long way. We talk numbers and strategies all day long, so connecting on something other than the actual work has been a great way for me to have good relationships with clients and other lenders.

Originally posted by @Dave Van Horn :

@Mindy Jensen

Eventually we got so close we formed a mastermind group together with a few other key people (like our insurance agent, accountant, IRA company rep, etc) to share and build everyone's network.

This is brilliant!  

Mindy Jensen, Real Estate Agent in CO (#FA100049656)
Originally posted by @Mindy Jensen :
Originally posted by @Dave Van Horn:

@Mindy Jensen

Eventually we got so close we formed a mastermind group together with a few other key people (like our insurance agent, accountant, IRA company rep, etc) to share and build everyone's network.

This is brilliant!  

 I've read you sing the praises of your lender (& you're an agent, so you actually know how to shop lenders), why don't you share your story too? :)

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

OK, so my lender story starts with Lending Tree. Banks competed, and my guy won. He is consistently the lowest closing costs and at or below the other rate quotes I'm getting. It's a true no-brainer, but he's a residential conventional/FHA guy. No commercial, and he sells it immediately, so it has to conform to the standards.

He's excellent for normal loans, but now that I'm branching out into creative stuff, he's not able to help. 

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

Wow!  ...this is a great feed - with our first home purchase we went through theee lenders to find the one we went with. Non of them made me feel like I was getting a very good deal not did any of them seem honest. However, I could have built a great network and business with one of the ones I turned down. Unfortunately his business tactics were not reputable and had ethical issues. In the end, I would rather have a ethical good business and partner with good people to bring everyone more business. I specialize in bringing people more business. 

The lender we use now was a referral from our agent. He just happened to be a local portfolio lender that approved us for 10 properties each. We got introduced as we were deciding to focus on our REI so we did a cashout refi with him on 1 SFH and purchased 2 others. I'd say we developed a good relationship by talking about what our goals are and reaching out to him whenever we had questions about loans.

We met our two great lenders through someone we met at our first meet-up group meeting in Vegas. We were new in town and met this couple that we became very close with. They embarrassed me and my husband and walked us into their network. We did two personal loans that was new for us and something we would do again. Now looking to do our 1st. flip in Vegas.

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If you are looking for a lender at a bank or credit union, you should be able to ask other real estate investors in your area who the smaller banks are and the lending contact at that bank that make loans to investors.  It will save you a lot of time since you won't have to do all the legwork yourself.  Once you find out that info., call and make a face to face appointment with the bank contact and ask them all the questions you have about loans.  It also helps if you can use the name of the person that referred you when you have the meeting; it typically gives you instant credibility.  The best lenders are those that you have relationships with if you can prove to them that you know what you are doing in real estate, many banks will be begging you to borrow money from them.

Hi Mindy,

Great question! I’m a local lender in the Phoenix, AZ area and figured I’d share my experiences. Similar to how my realtors get their referrals, I’ve found the best referral source is from past agents or clients I’ve already helped. Word of mouth definitely helps a lot, because when you create a great experience for one person, hopefully they share their experiences with those close to them.

More specifically, I’ve met my Realtors through local Realtor associations. These are not “MeetUp” groups, but associations created under the National Association of Realtors umbrella. Additionally, I’ve also connected with my Realtors by attending home tours, open houses, and networking functions.

The old fashioned face-to-face conversation is definitely a great way to get to know not only your local lenders, but the Loan Officer you’d likely be working with.

Hope this helps!

it’s honestly very hard to find and build a relationship with a good hard money lender and private money lender. So many of these guys try to rip you off with the hidden fees and outrageous rates and terms. Some are too good to be try and often times are scams. 

Lol honestly maybe a better question would be how to find a good lender and for the newbies what to look for from a lender. Maybe include a big review section on Biggerpockets where people can submit reviews on lenders. This will highlight the true real gems and expose the fakes. It’s honestly enough scammers in real estate so I think that will help everyone out. 

@Elbert Dockery I was reading through the thread and just waiting for someone to mention the sometimes not so shiny reputation of the private lending industry. Until @Mindy Jensen and the crew develop a review section on BiggerPockets.com, I would suggest asking any prospective private money lenders for references. That way, you can get a sense of the lender's past deals as well as a clear sense of the types of investors and business owners they work with. 

@Kristen Duggan haha well thank you but at this point they are just as bad as some general contractors when you ask for references. Sometimes you get ahold of someone that they personally know and you realize that this isn’t a reference. It’s more of a person they know that is trying to cover up and help them get some business going. For the most part, References are just like job application references......complete BS.....

The best lender for me was a local portfolio lender where there would be an actual relationship to be built. They have more flexibility on what they can do and how they do it than the conventional lenders do. The terms may not be as good at the beginning, but the benefits outweighed loan-shopping. BUT over time as the relationship was built and I proved myself, the terms kept getting better and better and they do some very special stuff for me. Now no one can touch what they do for me.

I did this in the same way I cultivated relationships with all my BEST anyone... find a win-win and always follow through on your side...

At the beginning I talked to several portfolio lenders about what I was looking to do as a first property along with what my plan for the future looked like. I found out what they like to lend on, their general loan terms for what I'd be looking at, options for as improved/construction loans, cash out refinance terms/seasoning periods, etc etc. Then I choose the one I thought fit best, and have kept going with them.

The loan process is crazy smooth with no application process. The only "application" process I do is I just send them my tax returns when I get them completed each year so they have it on file. Whenever I get a property or portfolio under contract I just send it to them and say I'm buying this for $xx and want to do this type of loan. Then they set everything up and then I go sign closing documents. 

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It's the same way I've cultivated other relationships wether it be flooring guy, painter, HVAC, contractor, etc. At the beginning I got several bids, talked to them about how many properties I have and my future plans. Picked the best fit, and just go with them. As long as things continue well and they give me quality work and good deals, I give them all my business and pay promptly.

Mindy you have two distinct thought process's for those answering.. One they are talking about conventional full doc national loan products.. this is where the great RMLO is the one who can make your deals go through.

we filtered to a medium sized mortgage broker my wife uses here in PDX they can table fund with their own money.. then resell.. and its a 15 plus year relationship.. when he says he can do the deal  it gets done.

I have had way to many sale fails in the past from RMLOs that were just terrible.. so you do need to find that proficient one. 

On the Commerical portfolio side which is where I am at my best and I like the most personally. this to me is relationship based.. and its a process. but once in the club like @Austin Fruechting is mentioning then its just annual financials and tax returns.. plus knowing what your lender will and or wont do.. but make no mistake you need to be VERY good at what you do.. you need experience and a decent balance sheet and liquidity position to get commercial loans.

On the HML that is changing daily with the crowdfunders and national HML jumping in the space. in many markets they have crushed rates to down to 9 to 11% APR includes rates and points.. down from 20% and 15% aprs in the mid 2000s

so good time to be looking for those HML any lender who advertises or seeks clients is a HML not a private money lender.. Private money is your family or close associate..

@Jay Hinrichs - for sure my special deals have come from being “VERY good” at what I do. I’m one of only a handful they do the special deals for. But everything else holds true with them. Since they service in house the loans process is very easy for any existing client, and on commercial or any investment as long as their DCR is above a certain point they consider it “self sustaining” and they’ll lend with no additional income required for the additional debt.

On the residential side I think most of my thoughts have already been stated above with the exception of making sure you check with your local credit union. Here in the Seattle market, BECU has great residential mortgage rates and options. On the commercial side, I would say the majority of commercial lenders will follow the 5 C's of commercial lending (in order of importance - character, cash flow, collateral, capital and conditions). I work for a local community bank here in Wa state and I focus most of my attention on the first three. Your banker can't get to know the character piece without relationship and for investor CRE, take time to get to know your banker and their underwriting criteria.

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@Elbert Dockery sounds like you've been through some frustrating stuff looking for financing. Rest assured there are thousands of options out there for you to choose from, and there's got to be at least one that can offer you quantifiable proof of their integrity. 

Hey @Austin Fruechting ... I may be heading to an investor's event in KC tonight, "KC House Traders". Have you been? Anything useful there?

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