How to approach a new bank?

Question

I have several rental properties and have either used owner financing or one particular bank. I have a pretty good relationship with this bank but they have recently gotten bought out. It is a small local bank. I am thinking ti may be in my best interest to begin building a relationship at another bank. I am finishing up a full remodel on a house that is currently paid for. I plan to do a cash-out refi so I can do a full remodel on the next couple places that are paid for and need some attention.

My question is this - What is the best way to approach a bank and explain to them that I would like to start doing business with them and that after I finish a few more houses, I would like to go back to buying more properties? Should I try and schedule an appointment? Or just show up and ask to speak to a loan officer? Are there any specific tips or tricks that you have used to successfully get a bank on board with financing your expansion?

Bryan Dahn · Answer

Thanks @Kerry Baird!

Kerry Baird · Answer

I have a folder that contains the schedule of real estate we already own, and which has the printed analaysis page for each property from BP’s tools. I also include our tax return, my husband’s salary, and a current credit report if I have one.  I prefer to have them *not* pull credit until I figure out whether we are a fit.

I like the weeding-out process mentioned above with phone calls, and have called at least 20 lenders in my area.  I have also done research on rates, LTV etc, online and then walked in and talked with a VP or a loan officer.

Bryan Dahn · Answer

Thanks @Kevin Romines! Makes sense. I would certainly say you're right that I may be overthinking it some.

Kevin Romines · Answer

@Bryan Dahn this is a good question and one that could be easy to over think?

All banks, credit unions, mortgage lenders have their loan guidelines. For the most part the guidelines don't change that much over time. As a loan officer, they are there not to say no to you, but rather to figure out how to make your situation fit the guidelines so loans can be closed.

Loan officers get paid on production of closed loans, so the more closings the higher the pay check. That said, some loan officers have a fair amount of easy loans and may become a little picky as to what they put extended effort into.

The easiest way to get the relationship started is to start by calling the places that your thinking about doing business with and figuring out what their lending guidelines are on the major items. Things like the max. LTV or loan to value. The max. debt ratio or on commercial, DCSR debt coverage service ratio. You will also want to get a general idea of the rates and fees. You might ask if you must be seasoned on title for a specific amount of time to be able to get a cash out type loan?

Just by calling first, boiling down your potential list of companies to do business with and then finally going and seeing them in person, you should save yourself a lot of time.  Ask for the list of documents you will need to bring in based on your scenario.

When you do go see them, try to have as complete a picture for them as possible. Bring in all the documents that you may need to get the loan process started and to the point to where they can pre-approve the deal. The more efficient you can be in getting documents to the lender, the easier and quicker your loan request will go. Ask the LO if they can detail the loan process to you from there and give you estimated time frames for the milestone events of the loan process.

Just be straight forward, don't beat around the bush, lay all issues out on the table as soon as you can. Let the LO do their job of figuring out if it will fit the guidelines and where he or she thinks they can get some exceptions or alternative documents to complete the loan process.

This is not a marriage, you don't have to court them really, but you need to be efficient and worthwhile for them to take on complex transactions. They would also love to hear that you can bring them additional business down the road as well. This will help keep them motivated.

I hope this helps?