Lender or Bank Loyalty?

Question

Question:  Is there purpose to showing bank or lender loyalty when obtaining additional loans?

I know from the Podcasts and reading these forums that some people enjoy having a relationship with their lender.  My thoughts on loyalty for this reason leave me confused.

My understanding is that banks make decisions on whether or not to loan money based on math (does my salary justify the loan, how much do I pay in other debt, how much am I putting down, etc.) and that the numbers either work, or they don't.  I didn't think that banks have the wiggle room to say "You don't make enough and my software is showing a "NO", but I'll lend you the money anyway, because you seem smart and I've loaned to you in the past!"

I look at bank loans like I do airline tickets:  I go on Kayak/LendingTree/etc. type comparison site and go with the cheapest available.  Can you share your thoughts on the above?  Thanks

Rashad Luckett · Answer

I agree with most that was said above. I would add that having the right investor friendly Loan Officer to package/submit your loan properly is a must. I have found one a will only use her until can't anymore.

Steve Vaughan · Answer

Definitely a relationship biz as Mike points out.

I use and send all my buyers to my local bank that keeps deposit slips prefilled out for my tenant rents. They have a fireplace and free keurig coffee and greet and smile when you come in. They also get a goodie basket from me every Christmas.

I could shop and save a buck, but my lender is competent and available and has become a friend.  Stay local if you can!

Mike Cumbie · Answer

Hi @Kristina Jensen,

I know many people believe in the cheapest option. I sure know plenty of them. I don't have a personal type relationship with them. Usually they are hiring a new painter every week, individual roofers on every project because there was some spat over money and work performed. Wholesalers never send them anything because the arguments and debates over cheapest option are exhausting. When something comes along I will pitch it over to them if my regulars are not interested, but for the most part I auto add 20% so that they can feel like they fought the price way down when we get it to the actual price.

The people I work with on a regular basis give me good rates (not the best, but I don't pay retail). They make enough money that it's worth getting to me in a timely manner. Worth pushing things through when they have to and passing on savings when we can all make a decent buck. I use their services and they use mine when the time is right. We all cut prices, but we all still eat and have time to spend with our families.

As far as my mortgage people I have a couple but they can cover any situation I run into so they get my business and my referrals. I don't go around them for my personal stuff and if a client asks they get the referral. If I call on Sunday night, I most times get an answer, if not they will get back to me as soon as possible. Which is fine with me.

I have said it before and I live by it. This business has nothing to do with real estate and everything to do with relationships. Your loyalty will be paid back by them when things come up. If you aren't you will be a number (which some are fine being). That generic internet lead (to go with the other 40 that came through today). It's just a whole lot more work to chase that dollar everyday for every item. I have the trusty old group of people to call and I know things get done.

Good Luck in your investing however you choose!

EDIT: Side note, I have seen people sitting at the closing table waiting for a call or check that never came. I have seen people get the call 2 days before closing. OOOOPS we missed this and we can't close. The first time that happens and a deal worth 150K in profit vanishes, you start to find the people that get it done and right.

Kristina Jensen · Answer

Thank you all so far for your answers.  I think I look at it differently right now since I am a small fish (2 SFR rentals) and so my relationship with the banks is quite infrequent.  Perhaps I'll change my disposition when I begin to expand.  Good points for me to remember.

Cameron Pendergraft · Answer

Whereas I believe money and lending has become a bit of a commodity that should be shopped, there are other factors that go into picking a lender than simply interest and fee pricing in my opinion. My current lender wasn't the cheapest lender that I spoke with but he was fairly close and he has the capability to fund 10 residential loans for me rather than capping me at 4 like I'm assuming most other banks would.

Also, building that relationship might mean sometime in the future that rather than getting a flat no that my banker could give me tips/suggestions on how to restructure a deal to get it to go through. I doubt I would get that service if I continuously price shopped.

Harjeet Bhatti · Answer

@Kristina Jensen We all have guidelines in our industries where we work so does the mortgage industry. You fit in those guidelines or with some exception you may have the loan. Regarding relationship yes that goes strong by time with your lender because you know if you have any question you can reach out to your lender for advise. In relationship you know your lender know your loan scenario will get you right answer  and guidance, may be not the loan if you don't fit in guidelines.

Lender or Bank Loyalty?

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