Approved for a loan. Let's see if any lenders here can beat this rate!

[Martin Yip Toll So]

Hey guys,

I'm an out of country investor (let alone out of state)  from Canada. I've gotten approval from a US bank by using my Canadian credit history- RBC Georgia NA  (a subsidiary from RBC Bank Canada).

The loan terms are:

-25% down

-7.625% interest rate 

-7/6 ARM

-30 year loan term

I was wondering if any lenders out here on BP are willing to play game and see if they can beat this rate.  However, there are 2 conditions I require

- I'd be limited to a DSCR loan since I don't have credit history in the USA yet.

- I don't need a 7/6. A 5/1 ARM or lower is fine by me.

- Minimum loan amount of 100k is fine. (props to you if you can lend 75k or less)

Lets see what you guys got!

Thanks,

Martin

[Jason Wray]

Martin,

If you have a lender who is going to offer you a Foreign National DSCR purchase loan for $100K or under with a rate of 7.625%, you better find a way to close fast. More than likely its a 3 year or 5 year prepayment penalty - So you cannot sell it or refinance for 3-5 years. (make sure you check).

Most Banks & Lenders now have a $125K minimum loan amount and when a bank tells you their minimum loan amount it means "After down payment" Most investors confuse that part.  

Hopefully the loan officer who quoted you that is familiar with FN and DSCR loans.

[Martin Yip Toll So]

Quote from @Jason Wray:

Martin,

If you have a lender who is going to offer you a Foreign National DSCR purchase loan for $100K or under with a rate of 7.625%, you better find a way to close fast. More than likely its a 3 year or 5 year prepayment penalty - So you cannot sell it or refinance for 3-5 years. (make sure you check).

Most Banks & Lenders now have a $125K minimum loan amount and when a bank tells you their minimum loan amount it means "After down payment" Most investors confuse that part.  

Hopefully the loan officer who quoted you that is familiar with FN and DSCR loans.

 The loan I have right now is the loan from the bank - a conventional loan.

[Jason Wray]

Quote from @Martin Yip Toll So:

Quote from @Jason Wray:

Martin,

If you have a lender who is going to offer you a Foreign National DSCR purchase loan for $100K or under with a rate of 7.625%, you better find a way to close fast. More than likely its a 3 year or 5 year prepayment penalty - So you cannot sell it or refinance for 3-5 years. (make sure you check).

Most Banks & Lenders now have a $125K minimum loan amount and when a bank tells you their minimum loan amount it means "After down payment" Most investors confuse that part.  

Hopefully the loan officer who quoted you that is familiar with FN and DSCR loans.

 The loan I have right now is the loan from the bank - a conventional loan.

If you live in Canada you more than likely have a DSCR or a Foreign National loan. The only way to get a standard conventional loan is with US credit, US tax returns etc...

Unless you hold funds in a US Bank already and they gave you an in house loan or private loan based on assets.  

[Jason Wray]

Quote from @Martin Yip Toll So:

Quote from @Jason Wray:

Martin,

If you have a lender who is going to offer you a Foreign National DSCR purchase loan for $100K or under with a rate of 7.625%, you better find a way to close fast. More than likely its a 3 year or 5 year prepayment penalty - So you cannot sell it or refinance for 3-5 years. (make sure you check).

Most Banks & Lenders now have a $125K minimum loan amount and when a bank tells you their minimum loan amount it means "After down payment" Most investors confuse that part.  

Hopefully the loan officer who quoted you that is familiar with FN and DSCR loans.

 The loan I have right now is the loan from the bank - a conventional loan.

I would open an LLC establish an EIN, open a business checking account with major FDIC bank. Establish credit by opening a Business credit card linked to account or funded account and once you have the credit, and the first years 1099 or Schedule C & E I would see if you can go Non/QM 1 Year or straight Portfolio vested in the LLC.

Rates would be better with 25% down or by then you can use 15% down.

[Stuart Udis]

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

[Kevin S.]

Quote from @Stuart Udis:

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

 "I was wondering if any lenders out here on BP are willing to play game...." is not the best choice of words.  

"there are 2 conditions I require..." is right behind it.  

Stuart hit it on the head.  Hope you change course and the rest a smooth sailing for you.  Good luck.

[Jay Hinrichs]

Quote from @Stuart Udis:

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

Exactly this is the kind of borrower that is a freaking nightmare and I personally would not even engage or write them back.. There is far more to lending relationships than rates etc.
I know for me with development type loans the relationship is worth 25 to 100bps all day long .. I see others in my industry that borrower construction money from the wrong lenders because they thought they were getting the best rates etc and first little hiccup and those lenders put the screws to the borrower.. the OP is missing the forest for the trees. Stuart I have been with my commercial banker now since 1993.. started with a little 100k LOC to buy timber and within 8 years I was the largest borrower at that bank at about 15 mil.. ( small community bank) but we fought through the GFC together I had to start over and my banker kept one last 1mil LOC open for me so I could operate and since those dark says of 2010 he has gone on to fund 5 subdivisions for me 300 plus homes and 100 plus million in loans and this is based on relationship 100%..

[Stuart Udis]

@Jay Hinrichs 100%.... a few years ago I did a JV on a ground up condo project. The partner was adamant about using a particular bank because their rates were lower. First the underwriting process was painful and a huge waste of my time. The bank stopped just short of requiring a colonoscopy and hired an incompetent attorney to draft the loan docs requiring unnecessary back and forth with the title company prior to funding the loan. Followed this up with a terrible construction draw administration process and then due to some contractor issues we missed the sales covenant.... Mind you this was a $930K loan, notified the lender 6 weeks ahead of time that we were going to rent the units, and had three $2,850+ leases executed by the time the sales covenant date hit. Rather than call and inform me they were going to trigger the default rate (5 basis points higher), I learned through a mailing. Fast forward a few months, we refinanced the building and sent the construction lender the $2M appraisal and nicely told them our loan was the least of their problems and will never borrow from them again.

[Martin Yip Toll So]

Quote from @Kevin S.:

Quote from @Stuart Udis:

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

 "I was wondering if any lenders out here on BP are willing to play game...." is not the best choice of words.  

"there are 2 conditions I require..." is right behind it.  

Stuart hit it on the head.  Hope you change course and the rest a smooth sailing for you.  Good luck.

Hey there,

I'm sorry if I came across the wrong way. I'm a new RE investor in general and my intention was to shop around here if anyone is wiling to offer a better rate than my current one.

I mean no harm/offense to any lenders out here, but I thought it would be a 'fun' post to do to attract some attention and traffic. I guess I am in the wrong so my bad on this.

Perhaps I am coming from a perspective of a conventional strategy where banks  barely interact with their borrowers and treat them like a statistic on their Excel spreadsheet - again my bad on this. Maybe because I'm new  and I don't really understand the concept of having a "personal relationship" between lender and borrower yet. Most of the time I've been taught are that lenders are just people who are willing to get paid as long as you meet their criteria, nothing else

Thank you for the feedback everyone, I will try and communicate better the next time I post

[Jay Hinrichs]

Quote from @Martin Yip Toll So:

Quote from @Kevin S.:

Quote from @Stuart Udis:

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

 "I was wondering if any lenders out here on BP are willing to play game...." is not the best choice of words.  

"there are 2 conditions I require..." is right behind it.  

Stuart hit it on the head.  Hope you change course and the rest a smooth sailing for you.  Good luck.

Hey there,

I'm sorry if I came across the wrong way. I'm a new RE investor in general and my intention was to shop around here if anyone is wiling to offer a better rate than my current one.

I mean no harm/offense to any lenders out here, but I thought it would be a 'fun' post to do to attract some attention and traffic. I guess I am in the wrong so my bad on this.

Perhaps I am coming from a perspective of a conventional strategy where banks  barely interact with their borrowers and treat them like a statistic on their Excel spreadsheet - again my bad on this. Maybe because I'm new  and I don't really understand the concept of having a "personal relationship" between lender and borrower yet. Most of the time I've been taught are that lenders are just people who are willing to get paid as long as you meet their criteria, nothing else

Thank you for the feedback everyone, I will try and communicate better the next time I post

I understand things are much different in CA  with vast majority of the lending handled by the 5 or so banks in the entire country.. But when I bought property in Kelowna BC and got a CA bank loan the bank for sure wanted to create a relationship with me as a client.. brokers are just not as prevalent. in the US brokers for these types of loans are out there by the thousands some good some not so good.. when you find a good one you want to be loyal to them.

[Martin Yip Toll So]

Quote from @Jay Hinrichs:

Quote from @Martin Yip Toll So:

Quote from @Kevin S.:

Quote from @Stuart Udis:

@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.

While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success. 

I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist  and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run

 "I was wondering if any lenders out here on BP are willing to play game...." is not the best choice of words.  

"there are 2 conditions I require..." is right behind it.  

Stuart hit it on the head.  Hope you change course and the rest a smooth sailing for you.  Good luck.

Hey there,

I'm sorry if I came across the wrong way. I'm a new RE investor in general and my intention was to shop around here if anyone is wiling to offer a better rate than my current one.

I mean no harm/offense to any lenders out here, but I thought it would be a 'fun' post to do to attract some attention and traffic. I guess I am in the wrong so my bad on this.

Perhaps I am coming from a perspective of a conventional strategy where banks  barely interact with their borrowers and treat them like a statistic on their Excel spreadsheet - again my bad on this. Maybe because I'm new  and I don't really understand the concept of having a "personal relationship" between lender and borrower yet. Most of the time I've been taught are that lenders are just people who are willing to get paid as long as you meet their criteria, nothing else

Thank you for the feedback everyone, I will try and communicate better the next time I post

I understand things are much different in CA  with vast majority of the lending handled by the 5 or so banks in the entire country.. But when I bought property in Kelowna BC and got a CA bank loan the bank for sure wanted to create a relationship with me as a client.. brokers are just not as prevalent. in the US brokers for these types of loans are out there by the thousands some good some not so good.. when you find a good one you want to be loyal to them.

 Thanks for your feedback! Yeah definitely I'm still stuck in the Canadian mindset. Glad you found Kelowna nice by the way!

[Kevin S.]

@Martin Yip Toll So

No problem Martin.  It speaks of inexperience rather than intention.  Members here are mostly helpful and understanding.  

[Don Konipol]

For a long term real estate investor, or one who hopes to be in it long term, a great lender relationship may be VITAL to your survival during hard times and your ability to take advantage of wealth building opportunities during good times.  

I'm on both sides of the coin; I'm a hard money lender, a private lender, AND a borrower for the property purchases I make or syndicate. My partner and I developed a banking relation with a moderate sized Texas bank 11 years ago. We worked out a deal where is we borrowed at 50% LTV we would not need to provide personal guarantees and the loan would be secured by the mortgaged property ONLY. We were to receive an interest rate on par with their "best" customer rate, and 20 year fixed rate financing!
About 4 years ago we purchased a retail center for cash and after stabilizing the tenancies financed $650,000 at 4% fixed 20 years with this lender.  3 months ago this lender allowed us to wrap their note in a new first lien we provided to a buyer with a 10% interest rate - essentially granting us the right to collect the differential between 10% and 4% on the principal balance (currently $610,000).  The bank may have been influenced by the fact that we had previously borrowed and then paid off 2 loans totaling $5 million also secured by single properties (with no personal guarantees).  

Here’s the bottom line - commercial loans are NOT a commodity.  If I’m looking for a quote on gold, all things being equal, I’m looking for the lowest or highest price (depending if I’m buying or selling) since gold is a commodity.  But comparing rates on commercial (non standardized mortgages) is like asking what’s the price of carpeting without specifying the quality, type, color, installation, warranty or anything else.  Someone will bid $2 per yard and you’ll end up with carpeting that doesn’t last one day.  

If you want sustainability as a real estate investor  DON’T settle for anything but the best in mortgage brokers, lenders, real estate brokers, wholesalers, marketers, attorneys, insurance agents and title companies.  Any amount you “save” Will be lost in inferior advice, execution, or opportunity. 

[Steve K.]

A lot of times the lender offering the best rate up front will not care about meeting your contract deadlines or protecting your earnest money or even actually closing the deal. Go with a lender you can trust to get the funds delivered on closing day, which is much more important than whatever rate they promise you up front. A lot of times the lowest rate lenders actually have higher fees and closing costs, offsetting their low rate anyway. There’s nothing worse than a lender that over promises and then can’t deliver (sometimes they don’t even review your file before giving you the pre-approval letter and assuring you that all is well, charge you for the appraisal and let you go through inspection and pay for that out of pocket too, then their underwriters get involved and discover some reason they can’t process the loan leaving you high and dry). Just build a relationship with a great lender that can actually close the deal and has decent rates would be my advice. Even if others are advertising better rates, they may end up just wasting your time and possibly your money.