How to select a good lender for your first 10 rental properties?

[Tatiana C.]

Hello everyone,

Would you share your experience selecting the lender for your first 10 rental properties? Since you can get conventional mortgages  with Fannie/Freddie, what criteria do you use to choose a Bank? 

Or would you consider private lenders for those first properties? In talking to some fellow investors, some mentioned that private lenders could be more expensive. On the other hand, there are private lenders who offer portfolio loans for when you need more than 10 rentals, then would it be best to just start with those so you can keep going beyong 10 properties?

Regarding pre-qualification, in getting pre-qualified with 2-3 lenders to compare rates and services, does that hurt your credit?

Many thanks in advance.

[Andrew Postell]

@Tatiana C. thanks for the offer to reach out.  And thanks for the mention @Chris Mason.  Since others might search for this subject later I wanted to provide a quick list of questions I would recommend ANY investor to ask their lenders.  As investors we have very specific needs when we purchase properties.  These questions are designed to help us identify "investor friendly" lenders.  So whomever you are thinking about using...ask these to see what their responses are.  Oh, and if they say a lot of "I don't know...let me ask" that also might be a flag that they aren't used to working with investors.

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. When do you start using “After Repair Value” on my property?
3. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
4. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
5. Can I change title to my LLC?
6. Do you sell your mortgages?
7. What is your loan minimum?
8. Can you explain to me what your reserve requirements are?