How do you choose your lender's location?

15 Replies

Because the real estate market is so hot right now, we are looking in multiple markets for our first STR purchase - all of which are outside of our immediate area.

Do you see any issues with us using a local (to us) lender, someone in our home town, to work with for this purchase? I frequently hear the importance of using a local lender (local to the market you are buying in), but because we are looking in several areas, I'm thinking it may be easier logistically to interview several lenders nearer to us, rather than the actual property markets. We live in central Wisconsin, and there are several good banks/CUs in this area - but many of the vacation towns we are researching have fewer options.

Thoughts?

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Originally posted by @Collin H. :

A local lender that you already know is actually best.

Thanks for getting back to me. Just to clarify, a local lender in our home area, or a local lender in the rental property market? Or, are you saying any local lender versus a nation-wide lender? 
Thanks:)

Originally posted by @David Taylor :
Originally posted by @Collin H.:

A local lender that you already know is actually best.

Thanks for getting back to me. Just to clarify, a local lender in our home area, or a local lender in the rental property market? Or, are you saying any local lender versus a nation-wide lender? 
Thanks:)

The key isn’t where the lender resides, but rather the relationship with the banker. Use the bank where you have an established relationship. 

Originally posted by @Collin H. :
Originally posted by @David Taylor:
Originally posted by @Collin H.:

A local lender that you already know is actually best.

Thanks for getting back to me. Just to clarify, a local lender in our home area, or a local lender in the rental property market? Or, are you saying any local lender versus a nation-wide lender? 
Thanks:)

The key isn’t where the lender resides, but rather the relationship with the banker. Use the bank where you have an established relationship. 

Ah! Thanks! Much appreciated.  

Use a lender who does a lot of business in the asset class as well as market that you intend to buy. Appraisals are taking weeks right now and the lenders whose names they recognize get picked up faster because they have a longstanding relationship. In addition, when making an offer, if the listing agent is familiar with the lender that can make a difference in multiple offer situations. Lastly, a lender who is not as familiar with the market you are buying in may not be as nimble with overcoming some of the more nuanced obstacles of that particular market.

Case in point: I took my own medicine on this recently. I bought a place in a new market. It's just a state or two over from the market where a lender who I have done tons of local commercial deals with is (but they had never done a deal in this market or asset class). I wanted to use them to continue to move the relationship forward (even though I caution clients against it all the time)...ended up with an appraiser from 3 counties over and a 17k under appraisal...using comps from 2018.

Originally posted by @Avery Carl :

Use a lender who does a lot of business in the asset class as well as market that you intend to buy. Appraisals are taking weeks right now and the lenders whose names they recognize get picked up faster because they have a longstanding relationship. In addition, when making an offer, if the listing agent is familiar with the lender that can make a difference in multiple offer situations. Lastly, a lender who is not as familiar with the market you are buying in may not be as nimble with overcoming some of the more nuanced obstacles of that particular market.

Case in point: I took my own medicine on this recently. I bought a place in a new market. It's just a state or two over from the market where a lender who I have done tons of local commercial deals with is (but they had never done a deal in this market or asset class). I wanted to use them to continue to move the relationship forward (even though I caution clients against it all the time)...ended up with an appraiser from 3 counties over and a 17k under appraisal...using comps from 2018.

Very interesting! Thanks for the great information.  

To provide a different perspective, I loathe local lenders. Their website, communication, and online portals are usually garbage, and when I have 40 documents to submit each closing, it drives me up a wall to send 100 emails back and forth. I now only use online lenders like simplist or quicken because all I do each morning is log in, see which docs they need, and upload. I can text or call my rep and they're usually on the ball within minutes to fix any problems. 

That being said we have had some wonky appraiser issues, but who hasn't... 

@David Taylor , as long as they are in Wisconsin; same State is local enough. 

Most people think local lender is important on how the lender can serve THEM better as a buyer, understands the local comunity and their motivation to invest - the latter is only an issue when you use a portfolio loan, no issue with a conventionl, that's all gov underwriting guidelines.

Thinak about thr seller's perspective. The case for a local lender is that they have a reputation (hopefully) to close deals on time. As a listing agent that is a top concern when we pick one of muntiple offers. Who brings the money is one of the biggest decision makers when it comes to selecting an offer. Online lendersn and national bank go to the bottom of the pile for me. Some mortgage brokers as well.

If the seller does not pay attention, the listing agent will - nothing is worse than a deal falling through or getting delayed because of the lender. It's the #2 issue after inspections.

@David Taylorundefined

@David Taylor I would suggest having one lender as a backup in your home town (proximity to you) that can lend to all markets you're looking into just IN CASE you cannot find a local (proximity to the property) lender. This will avoid any last minute scrambling. 

It's usually best to use local (proximity to the property) lenders until you get to a breaking point on the number of lenders you use. 

For example, if you begin investing in multiple cities and states you will end up with several lenders. It will be easy to manage in the beginning but will become time consuming as the number grows. I don't know what the breaking point is, it's different for everybody. Maybe after using 3-5 lenders you begin to consolidate. 

Originally posted by @Marcus Auerbach :

@David Taylor, as long as they are in Wisconsin; same State is local enough. 

Most people think local lender is important on how the lender can serve THEM better as a buyer, understands the local comunity and their motivation to invest - the latter is only an issue when you use a portfolio loan, no issue with a conventionl, that's all gov underwriting guidelines.

Thinak about thr seller's perspective. The case for a local lender is that they have a reputation (hopefully) to close deals on time. As a listing agent that is a top concern when we pick one of muntiple offers. Who brings the money is one of the biggest decision makers when it comes to selecting an offer. Online lendersn and national bank go to the bottom of the pile for me. Some mortgage brokers as well.

If the seller does not pay attention, the listing agent will - nothing is worse than a deal falling through or getting delayed because of the lender. It's the #2 issue after inspections.

@David Taylorundefined

Excellent insight, thanks! 

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Originally posted by @Jon Kelly :

@David Taylor I would suggest having one lender as a backup in your home town (proximity to you) that can lend to all markets you're looking into just IN CASE you cannot find a local (proximity to the property) lender. This will avoid any last minute scrambling. 

It's usually best to use local (proximity to the property) lenders until you get to a breaking point on the number of lenders you use. 

For example, if you begin investing in multiple cities and states you will end up with several lenders. It will be easy to manage in the beginning but will become time consuming as the number grows. I don't know what the breaking point is, it's different for everybody. Maybe after using 3-5 lenders you begin to consolidate. 

That’s a really great idea - since we hope to have a diverse range of properties through various markets, having a core lender we can continue to return to seems like it would be less complicated logistically. 

@David Taylor I use the local bank I’ve worked with for 25 years. I know the mortgage officer personally, they don’t sell off their loans so you can always call and talk to either the mortgage officer, her assistant, or they will get you to someone else if need be.

If I’m using one of my accounts with that bank for the closing they offer to just move the money so I don’t have to go get a check. (I also have a second bank I do business with locally).

I usually go local to the property. Local lenders (CUs, etc) like to invest back into their own community when they can. Keep in mind a fair amount of banks will have geographic restrictions. I.e. only lend on properties within X miles of a branch location.