Financing investment property through a bank

In my borough(county) there are three different types banks that reside. The National bank(Wells Fargo), a regional bank, AlaskaUSA and the local bank that has four branches total. My question is does it matter which bank a beginner like myself should build a relationship with or should I go to a bank that caters to my investment strategy?

Don’t approach a Bank until you have 12 months trading accounts, or better still 3 years accounts. Try to understand banks get 100s of approaches each week, no matter how good your idea is -basically they are not interested in it, in practice all they are interested in is security, guarantees from a 3rd party, and how-much-money-you’ve-got-deposit. Your money, not borrowed from elsewhere funds. To get you out of the office nicely they’ll ask you for a business plan, this is the old heave-ho. So keep away from banks until your a business with assetts and balance sheets.

Banks are all the same, pawnbrokers with cllassier looking offices, and take it from me they’re real professionalism is the hidden fees they can screw out of you. Written by me not from the heart - but from the school of hard knocks.

This November I get a check for 10k, then in January I get a tax return of around 5k. I will pay off all debt and end up with around 12k.

I will have zero debt, 12k in of my three accounts with my bank and ficos around 675. How will this look to a bank? If I approach a bank with a property that I have under contract for 80% ARV , cost 150k, gross rents of $2200. How would this look to a bank? I don’t want to put money down. Is this doable?


Banks are in business to make money. They are not evil pawn brokers or satan in disguise. Their business is making a profit - just like mine. If you have excellent credit and some cash reserves, they will loan you money. If you have terrible credit or no reserves, they certainly will not loan you money, nor should they. Of course, they are interested in security. I wouldn’t loan money to anyone, if I wasn’t sure that they could pay me back.

When I go to the bank for a loan, I always take a funding request packet with me. It details what I want to do; has all the documents the bank will need to process the loan; and includes my business plan. That helps portray to the bank that you are a professional and not just another wannabe with a get rich quick scheme.

investor wanna be,

I always use small local banks. They have more flexible lending policies, especially if they keep their loans in their own portfolio. They also often have lower fees than national banks. I never use mortgage brokers because they are middle men who charge an additional fee. It is very important to know the important players at the bank. If you don’t already know these people, you might be able to get an introduction from a friend or another investor at your REIA.

Good Luck,


Re Property Manager: I agree with ou upto a point. But sincerely ask you to look behind the scenes or under the floorboards at banks and the way they operate. In all jurisdictions they advertise as the fair bank, the listening bank, the bank who wants to help new businesses, or the bank who will be there when you need them. Just dial this number and we will help is the message.

The truth is this is just advertising baloney, it misleads young people into thinking that banks will help them, and causes these people to spend a great deal of time and effort getting ready for the interview, the meeting, and discussing their plans. What I 'm saying is banks would appreciate it if you did not approach them, you see they would rather lend $15 million, better still $50m, than any sum less than $250k/ $500k. To be frank banks do not want loans of anything less than a $1m today. I admit they go through the motions, but this is to keep local savers and investors happy. Its P.R. This is the point I was trying to make. So, being a practical sort, I’m saying at least for the first 12 months find other finance and do not reply on a Bank.
*My daughter was a loan officer, it made her weep at some of the little white lies she had to spin, she was not allowed to mention the banks policy was tradesmen and small unknown investors had to be shown the door.


I agree with you that the advertising is much different than the reality. Banks do not loan money to people who really NEED it. However, banks will loan money to people who have excellent credit and some cash reserves. I have gotten MANY loans from small local banks and they are more than happy to lend as little as $50,000.


 Banks are people who loan you an umbrella when the sun is out, then want it back the minute that it rains.
 Future guru: you ought to be able to get this loan without a problem.
 Investor wanna be: I would believe just about anything that Mike suggests about local banks, but I wouldn't know; I do know that the big fish generally have very defined requirements so they are not slapped with any equal opportunity violation lawsuits.  Sometimes lenders need to raise capital, sometimes lenders need to loan money, sometimes they need to meet quotas for the types of loans they carry.  In my experience, a good mortgage broker can find a lender (among thousands) and collect thousands in commissions and still get a better loan than going to a lender directly.

Good Luck


Lets have a good laugh at Banks:

Quite sometime ago I tried to borrow from a large renowned bank, I had been with them 11 years, my credit history was middle to good, we had a full order book, but the loan was turned down. About 3 days later I read in the press that they had loaned the State of Mexico another trache of $250 m dollars, that they had lent , Mexico and South America including Argentina about $3 bn dollars, and this was according to this bank spokesman the next biggest growth area in the world. You won’t remember this but they got knocked, lost all this loan money and had toi write it all off. They then did a raid on the Crocker Bank of California, this cost them another $2 bn / 3bn in write-offs, and they were forced to close, to join up with another foriegn bank who had to rescue them - act as a white knight. And my company is still going strong and they’ve long gone. Kaput.

All banks large and small must comply with federal community reinvestment act laws. That being said, the smaller community based banks will likely be more attuned to your needs. The larger banks are often in the market for larger commercial loans because they have such a large volume of funds to reinvest. However, there are times the big banks will cut attractive deals when they are trying to penetrate a new market.

I was recently told to go to a small bank to avoid paying point at closing. They guy was talking about refi and HELOC nut what about mortgage?

I don’t like the fact that I have to pay a mortgage company a few thousand dollars to lend me money. what type of financial intitution is best when it comes to this?

We all agree we don’t want to pay arrangement fees, but even traditional banks have fees. Its an industry with 300 years lending history and with banks its a case of let the borrower beware.

So do you pay more a small local bank or large mortgage company?

Future Guru,

With a small local bank, I normally pay one point in bank fees. Mortgage brokers arrange loans between the borrower and the lender. Therefore, you will pay a fee to the lender and another fee to the mortgage broker. They are a middleman. I don’t have anything against using a mortgage broker, but I’ve found that it is less expensive to use small local banks.


Local banks also tend to know the market in your area better and are better judges about the profitability of the project.