Conventional Mortgage or Local Bank/Lender?

5 Replies


Which is the best way for lending if I'm focused on SFR or multi family rentals? Do I develop a relationship with a local bank and get loans through them so that I won't have to worry about reaching a limit of loans, jumping through hoops, etc. and in doing so, I'll pay a higher interest rate (5% vs. 4.5%), shorter term (20 year vs. 30 year) and ARM (5 year)? Or do I use a conventional lender (4.5% for 30 years with 20% down) for my first 10 properties then try to find a local bank/lender to help me after I've reached the limit? Obviously, based on which way I choose, this will affect my cash flow.

@Erin Gray Find a well reviewed, residential Mortgage Banker. Basically they will shop rates like a broker but handle the process, closing, and funding in house. Maintaining control. It’s the best mix and most of the best educated, most consultative lenders are mortgage bankers.

Jeff Dulla, Lender in IL (#031.0024775), CO (#100055471), FL (#LO24291), IN (#19621), MI (#207322), MN (#MN-MLO-207322), and WI (#600802)
(708) 531-8322

@Erin Gray My best advice would definitely be a residential Mortgage Broker. A broker offers the ability to to find the best available rate from the many lenders/investors they work with. DM me for any questions!

In my opinion for buy and hold, Single Family its best to start conventional as these offer the best long term fix rates. 

for SF houses 20% down and Amortisation up to 30 years - best for cashflow and cash on cash returns. 

Once you go to small multi family 2-4 units, these are still conventional but mostly require 25% down and slightly higher rates. 

When you go for 5+ units its classified as commercial with different rules and regulations. typically shorter fix loan and shorter Amortisation, and higher rates. 

I checked with my conventional lander this week and interest rates have gone up to low 5%s. 

this was quoted for 2- 4 units. (gone up last week)

A broker will be good way for you to shop around, or if you need a lender feel free to PM me and i can refer you to the ones i use for conventional loans. 

Hope that helps. 


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