Commercial Bankers won't give me my ARV. Anything else I can do?

[Chris Pohlson]

Hey guys. I'm in the refinance stage of my 4th BRRRR and I'm shopping commercial banking relationships. I'm running into a small obstacle. Most of the bankers I talk to want to make ARV the lesser of either my total costs into the property or appraised value. In this case I have $145k into the property and appraisal will be around $175k (not my best BRRRR but what do you do)

I've printed them the deal analysis using the BRRRR calculator here on BP (you know, the nice pdf and all), I've provided them market comps that support my cause...nothing seems to work. Policy is policy right?

At the end of the day it's a difference of like $24k cash back in my pocket.  Depending on your perspective, that's either a lot of money or a little.  I go back and forth.  I mean I could do a LOT of direct mail with that money.  On the other hand I understand I'm unproven to each person I sit in front of and I find myself asking what the relationship is worth.

I'm curious if some of the more experienced buy and hold investors had the same problem when first establishing their commercial relationships.

Do I just need to suck it up and establish the relationship at the lesser valuation?  Or do I push and search my *** off for a lender that will take the appraised value?  I see huge value in establishing a relationship with a local commercial banking partner sooner than later.

Thanks all. Always appreciate the insights.

[Jay Hinrichs]

I think it depends on where you want to end up.. but Not using ARV is quite conservative and probably means they don't really want to do those deals.. I know my commercial bank would never do a one off small resi deal like that.

but I know you have to start the relationship somewhere.. I started mine in 92 with my banker and talked him into a 100k line of credit to by timber.. that morphed to multi millions and now I will borrow 7 to 10 million a year from them for new construction and on buy and hold if I ever chose to do that which I don't.. I could get just about anything I wanted. 

To me establishing those contacts is a long game.. and when I start with Dan ( my banker ) he had just started his career at first interstate.. then they got bought by Wells I followed him there.. then he went to a local regional I followed him there then he moved to a smaller local bank were he is now head loan officer over all the loan officers in the bank and on loan committee .. when I go to the bank I meet with the president or at least say hi and will go to lunch with him and the head credit officer..  so after what 26 years it paid off but it for ME was a process..

and let me tell you so many of the BP folks have started in RE post 08 when O8 hit if I did not have this banker I would have cratered he carried me through when any other regional bank would and did kick me to the curb.. I had about 30 million in credit lines for my hard money company 8 with them and they were the only ones who kept my line every other one called them.. so we were put out of business and this bank lowered it to 4 million but I was just happy to have enough to make a living when things got so bad..

so that's my long winded story.. is there potential to grow then whats 24k its a drop in the bucket in the larger picture.