8 Reasons to Work With a Local Lender

By on July 9, 2015

I have 11 rental properties, and I complete 10-15 fix and flips a year.

I finance almost everything through my local portfolio lender, and there is no way I could do as many deals as I do without my lender. When I bought my first investment property, I used a mortgage broker, and it was not a good situation. We had to extend closing weeks because it took them so long to review my documents, I had to send in every single detail about my finances, and it was not a fun process.

I understand why many investors only buy one property if they have to deal with big banks or mortgage brokers. When I found a local lender who would lend me money on my rental and flips, it was an amazing change. Everything became easier, and they used common sense to lend money to me!

Why is my local lender so awesome?

 8 Reasons I Love My Local Lender

1. My lender will lend on more than four (and more than ten!) properties.

Most conventional lenders won’t loan to an investor with more than four loans. There are almost no big lenders that will loan on more than ten properties. My local lender will loan on as many properties as I can qualify for.

2. My local lender will lend on fix and flips.

I have a commitment with my lender that allows me to finance 75% of the purchase price on my flips. They charge 5.25 percent interest and one point on one year term loans.

I have not met a conventional bank that will do this, and hard money is much more expensive.

3. My lender does not require any repairs to be made.

Conventional lenders will want homes to be in livable condition — even for investors. I can buy a home that is almost falling down, and my lender doesn’t care; they don’t even need utilities to be on.

4. My lender does not require appraisals on loans under $100,000.

As I mentioned already, for houses that do need appraisals, they do not require any repairs or even the utilities to be on.

5. My lender is easy to work with.

When I bought my first rental, it was with a mortgage broker, and it took forever and was a huge pain. My local lender requires my tax returns and my accounts to be at their bank  — and that is about it.

6. My local lender allows cash out refinances.

Most conventional lenders will not allow a cash out refinance after you have four mortgages. My lender will allow a cash out refinance in most situations, including when I have more than ten mortgages.

7. My local lender can close fast.

I can close on my rental properties in less than 30 days and my flips in less than two weeks. If I have to pay cash for a flip right away, they can do a refinance in less than two weeks.

Due to that fast, closing times for my offers are much like closing on cash sales, with no appraisal and a two week close.

8. My local lender is more lenient on counting rental income.

Most big banks will want to see rental income on your taxes for one or even two years before they count that income. Then they will usually count 75% of the income towards qualifying for a new loan.

My lender in the past has only needed to see a lease to show income towards qualifying for a loan.


The downfall to a local lender is they do not offer 30 year fixed loans on my rental properties — but they do offer five and seven year ARMs with a 30 year amortization and no balloon payment. I don’t mind ARMs since I plan to pay my houses off quickly, and the ARM actually saves a lot of money over the first five or seven years.

My lender does not lend in all states, and local lenders all have different terms and policies. The reason a local lender can be so awesome is that they lend their own money in some cases. They do not sell their loans, and they do not have to go by Fannie Mae guidelines like the big lenders.

Read more at biggerpockets.com

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