Shawnee Mission, KS · Member since 2015 · 9 posts · 2 votes
Ladies and Gentlemen of the Bigger Pockets Community, thank you for taking the time to entertain my elementary question. I'm still in the "information gathering" stage of my RE investing and in all I've read and listened to, I've yet to see or hear any evidence that would explain what the differences between what broker lenders can offer vs. going right to the banks. My understanding is that most lenders have a 4 property minimum they'll assess to investors making it difficult grow. Why would I not just opt to work with a mortgage broker that represents say 12 different lenders and never have to make 50 phone calls to secure financing?
Real Estate Investor · Greenback, TN · Member since 2012 · 268 posts · 115 votes
10y
@Carl Snyder, That's not a bad idea. You'll need to meet/call a few to see how they respond. It's possible to find local or regional "portfolio" banks (lending their own money instead of Uncle Sam's) that are willing to lend on many deals at once. There really isn't any external limit or law for the number of properties that banks can lend on for an individual but regulators keep pressure on them to minimize their risks so the banks end up setting internal limits. Keep in mind that your ability to borrow from these banks will depend on your experience level. They're going to expect you to be able to convince them that you know what you're doing and their money is safe.
Ironically, the big banks (Bank of America, Chase, etc) limit you based on your available income, cash, and credit but they don't really care if you know what you're doing. They'll base their decision on your history rather than your future plans. If you crash and burn with a new idea, they'll pick up what's left of the wreckage and move on but the smaller banks won't take that risk. You might have to start with the institutional banks to get a few properties (experience) under your belt, then approach your local banks and credit unions.
Lender · Four Oaks, NC · Member since 2013 · 369 posts · 44 votes
10y
If you where starting out (under the bank lending limits) and had good credit I would start with local credit unions. They tend to have the best rates. And when it comes to flexibility within the banking world they tend to have more lea way on what they will allow on loans do to the fact that they usually don't sell off their loans. That being said I am partial to Consultants/Brokers (wink..wink). For most investors even those who start with banks end up using consultants either because they have hit there local banks lending limit, have maxed out there DTI (dept to income ratio), or are to busy to make the calls and visits the banks.
Real Estate Investor · Greenback, TN · Member since 2012 · 268 posts · 115 votes
10y
@Carl Snyder, That's not a bad idea. You'll need to meet/call a few to see how they respond. It's possible to find local or regional "portfolio" banks (lending their own money instead of Uncle Sam's) that are willing to lend on many deals at once. There really isn't any external limit or law for the number of properties that banks can lend on for an individual but regulators keep pressure on them to minimize their risks so the banks end up setting internal limits. Keep in mind that your ability to borrow from these banks will depend on your experience level. They're going to expect you to be able to convince them that you know what you're doing and their money is safe.
Ironically, the big banks (Bank of America, Chase, etc) limit you based on your available income, cash, and credit but they don't really care if you know what you're doing. They'll base their decision on your history rather than your future plans. If you crash and burn with a new idea, they'll pick up what's left of the wreckage and move on but the smaller banks won't take that risk. You might have to start with the institutional banks to get a few properties (experience) under your belt, then approach your local banks and credit unions.
Lender · Chicago, IL · Member since 2015 · 14 posts · 5 votes
10y
I'm in the mortgage industry and know from experience that banks generally have higher rates and higher fees in relation to a correspondent lender. I also know that there underwriting is a longer process with more overlays involved. I'm bias for sure but would definitely go with a broker/lender over big bank. Call me if you have any questions at all.