Do Lenders Really Know The Overall Real Estate Market?

[Calvin Lipscomb]

My group is just starting out on our real estate venture.  We are currently seeking financing for a Chicago 6 family unit that is currently rented.  We are purchasing the property all cash (we discovered that this can be a problem too) because we were running into two main problems when approaching lenders 1. This is our first deal and 2. We are NYC  based.   I expected some lenders to see that we are seeking to maximize our investment dollars by investing in a lower cost city.  You are not getting a 6 family unit in NYC for under $500k.  I had to explain our reasoning in detail to a number of potential lenders.  Which still did not help.  And we are seeking financing for the standard 75% of the purchase price.

Any thoughts on how to tackle this roadblock would be appreciated.  

[Chris Mason]

Originally posted by @Calvin Lipscomb:

My group is just starting out on our real estate venture.  We are currently seeking financing for a Chicago 6 family unit that is currently rented.  We are purchasing the property all cash (we discovered that this can be a problem too) because we were running into two main problems when approaching lenders 1. This is our first deal and 2. We are NYC  based.   I expected some lenders to see that we are seeking to maximize our investment dollars by investing in a lower cost city.  You are not getting a 6 family unit in NYC for under $500k.  I had to explain our reasoning in detail to a number of potential lenders.  Which still did not help.  And we are seeking financing for the standard 75% of the purchase price.

Any thoughts on how to tackle this roadblock would be appreciated.  

 Keep doing your thing, but FYI often commercial financing gets a lot easier once you have one or two residential 1-4 unit properties under your belt.