Time for a new bank

[Chris Adams]

My current bank has changed the rules on me. Typically I buy distressed homes with cash from a LOC set up for my LLC. I then rehab with my own money, and convert these single family rental homes to a mortgage based on the lesser of 80% of ARV or 1.20 DSCR, using 25 year amortization. I was getting 5 year notes for 5.125% - 5.375%, and yes I was getting excess cash outs. But I was also providing all of the labor myself, so the cash out was my sweat equity.

Now on my 5th deal my banker tells me they have a new credit manager and he con only finance 80% of my cost. Well here is the hard and fast numbers on this house.

PP=$50k

Rehab=$8k

ARV=$109k

But I was only asking the bank for a $70k loan, I wasn't trying to leverage this house very hard. And now the bank tells me he can only lend me $51k.

Had I known this I would never have put a tenant in this house, and I would have flipped it, but flipping isn't the plan, the plan is to create passive income, so lets not bring this into the equation.

So I am about to partake the wonderful journey of interviewing commercial banks for a new home. I know better than to tie myself to 1 bank, but in this case I did.

I have created a pretty nice request for financing PDF, and I have a nice PDF Portfolio for our homes. Along with the normal tax returns and blah blah blah.

Any other advice on what bankers are looking for would be helpful. I actually go about this a bit differently than most. I try to make banks compete for me rather than letting them think I need them.

Thanks BP