Tried to get a loan today... am I radioactive?

[Huggy Baird]

After having the door closed over and over years ago, @James Vermillion inspired me to try to get a loan with his blog post
http://www.biggerpockets.com/renewsblog/2012/05/27/financing-first-real-estate-deal-pitch-new-business-banks/

I have over $250k income/year, excellent credit, extremely low DTI, high net worth, personally own 8 rental units with mortgages (none are upside down or cash flow negative). my company has been in business and profitable for years (with zero debt on our large balance sheet). Over $300k cash on hand plus three homes (currently flipping) owned and renovated with all equity.

I was hoping to talk with the bank about either a commercial loan or a retail mortgage for the homes in my company.

On the commercial side, I could never even get to talk to someone. James inspired me to have another attempt

On the retail side I've never had any success due to both (a) wont lend if you own more than 5 properties. and especially (b) only up to 70% of the purchase price for the first 12 months. Since i buy the most dilapidated homes, I spend as much on renovations as i bought the home. For example, If i buy for $50k and invest $50k in renovations for a ARV of $150k. The bank will only lend $35k on that home since they use the purchase price. It's just not worth the hassle and closing costs for 35% LTV based on my investment (23% LTV based on appraisal).

Rather than the typical large banks that have policies written in stone, I took some advice of the James Vermillion and the BP community to shop around to two small regional banks today.

It was the most awkward experience ever. It was like I was radioactive from the minute I explained I'm looking to borrow on homes I'm fixing up for resale. The loan officer stood up and said "sorry, I can't help you". The second place I tried was reluctant to accept my business card. so akward. I spent a maximum of three minutes talking to each. The second bank was boarder-line unprofessional/rude. The first bank was just very short and wanted me gone

I did manage at the first place to say "I recognize agency guidelines make this impossible for the retail side, I've found others in my space have had success with commercial loans on pools of residential property. Is there someone from commercial I can speak with?" To my shock, for the FIRST TIME EVER, I did get to speak with someone from commercial. I think mainly because the retail loan officer wanted to walk me away ASAP.

On the commercial loan officer I received a greeting and within one minute I was told "our policy is to not lend on any dwelling with under 5 units". I will say, at least the loan officer in commercial was pleasant. I thanked her for her time and we exchanged business cards. I said I'll give her a call back next year to see if the policy changes and she was receptive to the idea. It was at least a minor win that for the first time ever someone would talk to me.

I'm thankful I really don't need the loans. My company is successful with our equity position. But with a little leverage we could do better for sure. I may try a couple more regional banks and credit unions... but I think I'll give it a couple weeks time to recoup from this demoralizing experience today

Hope the other BP members have some better luck than me