What is an “investor friendly” lender?

[Stuart Udis]

I observe the term “investor friendly” lender used regularly in these forums either by posters seeking financing or in the manner in which lenders market themselves. In many cases the forum inquiries or forum promotions are for construction or as many would call “fix & flip” loans. The qualifying attributes are consistently: quick close, no tax return, limited documentation…. Essentially all of the focus is on the approval process. Meanwhile hardly any emphasis is placed on the loan administration and even more importantly the relationship component of lending.

Far too many investors, particularly those just starting out, are being conditioned to seek out the “easy” lending choice rather than invest time and energy required to cultivate meaningful relationships with lenders who truly value the borrower/lender relationship and are interested in assisting you grow. From years of borrowing I can also say these are the lenders who will take the time to understand obstacles that may arise on any given project and formulate solutions that keep your projects moving. At the same time, many of these “investor friendly” lenders operate like robots without the ability to adapt to the situations that arise in construction lending which makes the construction administration process far more difficult than necessary.

I am currently involved with a simple single-family rehab adjacent to a larger ground up project. I went with the “easy” investor friendly lender for the single-family rehab while using a bank that had rigorous underwriting policies for the ground up project next door. The bank relationship is one I cultivated over many years and now lean on heavily for my more complexed projects. I am currently dealing with headache after headache with the single-family lender who cannot even articulate the reasons why they are enacting their flawed policies meanwhile it’s smooth sailing with the lender for the larger parcel directly next door where the loan is 20x the size.

I hope this illustrates where your priorities should be when forming your lender relationships and easy underwriting does not necessarily mean the lender is “investor friendly”.