If you invest in real estate, a good banker is one of the most valuable people on your team. Building a relationship with the right bank can save you thousands of dollars on interest and give you access to opportunities more quickly. As Christians, it’s also important to bank with an institution that aligns with your values. So, this blog will discuss the best banks for real estate investors and explore the value of a portfolio loan as opposed to a traditional mortgage.
What is a Portfolio Loan?
A portfolio loan is any kind of loan that a local bank would issue to you (for real estate) without selling it to a quasi-government organization like Fannie Mae, Freddie Mac, or the VA. The bank holds portfolio loans in-house, so they can control the terms and the interest rate.
A traditional mortgage is the exact opposite. Traditional mortgages can be a great option for first-time home buyers and investors early on in their journey. FHA, VA, and USDA loans fall into this category and are great financing opportunities for those who qualify. However, for the seasoned investor, traditional mortgages often come with more restrictions. Typically, the limit on traditional mortgages is ten.
The Best Banks for Real Estate Investors: Think Locally
One of the best things you can do as a real estate investor is build relationships with loan officers at local banks. The best banks for real estate investors aren’t the big chains. They’re the small, family-owned, local banks. These banks typically service mortgage loans themselves, so they can offer more flexibility regarding terms and interest rates.
Christian investors should pay special attention to the banks they choose to work with, as most of the bigger, nationwide banks are affiliated with causes that oppose Christian values. For example, U.S. Bank and Wells Fargo donate directly to Planned Parenthood, and several others promote pro-LGBTQ policies.
How to Build Relationship With Local Banks
If you’re going to secure multiple portfolio loans at a local bank, building a relationship is important. Here are four tips for a fruitful, mutually-beneficial banking relationship:
- Communicate Often
Touching base with your banker quarterly builds relationship and sets you apart from other investors.
- Share Your Goals
Be honest with your banker about your real estate investing goals and why you care about building wealth.
- Apply Early for Loans
Washington Trust Bank recommends applying for loans as soon as you think you’ll need them so that you and your banker have margin.
- Be Persistent
It may take several tries before you find a local bank that’s a good fit. Keep visiting banks and introducing yourself to leadership, and your persistence will pay off!
Check out this video for a more in depth analysis:
We hope this blog empowered you to find a local bank in your area. What questions or comments do you have about the best banks for real estate investors? Let us know in the comments!