Which California bank to talk to about my plans?

7 Replies

Hi BP! 

I was wondering if any investor here (BRRRR), when starting out, has spoken to (and has successfully worked with) a local bank in California?

I am in San Jose, so if possible to have someone in the San Francisco / San Jose / Bay Area in general, that would be awesome! 

Also, any advice on what are some things I should prepare in order to appeal better to potential lenders? 

Thank you all!

@Sev Stan

I am guessing that @Chris Mason would know the answer to your question, since he is in Oakland, CA (maybe he knows someone in that area). 

Some things to appeal to lenders:

If going conventional:

  • Good W2 Income
  • Low DTI
  • Good credit 
  • Cash Reserves
  • Fewer than 10 financed homes 

If going with commercial lending: 

  • Cash flowing assets
  • Business Plan that is scalable
  • Good cash reserves
  • Good credit if possible
  • Low DTI
  • Know your numbers very well

I know this was general, but that's the overall vibe I get from dealing with both types of lenders. 

Conventional lenders are going to act more like they have no clue what you are dealing with and just try to sell you a mortgage. As far as conventional lenders, I recommend  @Diana Muresan for an investor wanting to leverage conventional loans, at least the beginning. 

Commercial lenders are going to want a really good plan, good track record and are much more analytical when you speak with them, so make sure you are prepared and know the number that you want. Simply be confident and prepared. Also, in the commercial world, $1MM isn't a big deal, so if you are asking for less, expect to kinda be brushed off or put on the back burner, especially if getting loans for SFH (I've experienced this frequently trying to leverage commercial lending for SFH). @Andrew Postell is the man with the plan on BP for creative lending advice, so I'm sure he could help connect you with someone that could give you great advice in this space. 

Thanks for the detailed answer, @Scott D Burrows !! 

I am going for small multifamily units, thus conventional non-commercial loan would do. In terms of the terms you listed, I believe I check off every single line item.

You mentioned that for commercial lenders, they will look at a good plan and be more analytical; do you think that going to a conventional lender with something similar (printed out BP PDF calc sheet, process road map, a detailed plan of action) will help? Or will most of people looking at this that haven't done REI financing just gloss over it and go "mmm k" and toss it?

Also, thank you for the @ links to other members!

@Sev S.

Being prepared and showing you have done your homework can never hurt! 

However, most of them are just going to ask the same type of questions that they ask, for the most (NOT ALL), that they'd ask someone who is a non-investor. So, it makes for a bit of a merry-go-round at times. 

Just leg work and calling every bank in the phone book (especially bank with less than 7-8 locations, these will be the most flexible for sure. 

Good Luck!