Three strikes doesn’t always mean you’re out…
22…That’s the number of banks we have talked to in the last 8 months. If you read my last blog post, I mentioned we had found a financial partner…..yeah, that all fell apart. It was a super conservative bank that wanted to leverage an SBA 504 loan (which is a government loan) to help carry the financial burden. For a number of reasons, we decided that didn’t make sense for us and we walked away.
Never in a million years did I think it would be such a long, drawn out, and emotional process to secure a loan to build this property. After talking with 22 banks, here’s a few of our key takeaways:
Banks will loan on short term rental properties all day long if it already has rental income tied to it
Ground up construction for short term rental use is considered “risky”
Banks don’t care that it’s your dream
They don’t care how many social media followers you have or the number of people in support of your project
They don’t always follow through or do what they say their going to do
Sometimes they just ghost you
Other times they approve you and then tack on expensive “pending” statements - like “Great news! You’re approved pending you secure a performance bond”. Do you know how much a performance bond costs?!
Some banks consider your location too “rural” even though 14.5 million people visited the Great Smoky Mountains in 2021
Many banks don’t “play” in the short term rental market, meaning they don’t allocate loan funds to this market
Previous hosting experience doesn’t carry a lot of weight
I have never experienced “ups and downs” like we have with this process. One minute you’re celebrating you got approved, the next minute you’re learning that a performance bond costs $60k and quickly realize that’s not an option.
It was bank number 21 where I was ready to throw in the towel and give up. I was exhausted from digging, making phone calls, being rejected, and pulling together documents upon documents only to realize I had arrived at a dead end…over and over again. I was mentally and emotionally drained and, truthfully, wanted to quit. The thought actually crossed my mind that maybe it wasn’t meant to be and maybe we’ll just keep the land and some day build a house there.
But Jase, my sister, and my parents kept pushing me to keep going. And to be honest, I wasn’t always nice to them about it. I was angry that we had gotten this far and literally no one could offer us a deal that made even a little bit of sense. I had no choice but to hit my knees and surrender it all to God. And that’s what I did. I prayed endlessly, I dug deep into my daily devotions, and surrounded myself with worship music everyday. I quit chasing it and just decided to plant seeds with the TWO people in the banking industry that I had grown to trust and left it in their hands. I am a total control freak when it comes to coordinating and organizing something like this project, so letting go of the control and putting my faith in God was a hard step for me.
Surprisingly, what came from that was freedom. Freedom to stop worrying and when I felt worry and doubt start to creep in, I immediately prayed for God to take it from me. Literally, 2 days after hitting my knees and surrendering MY timing, I got a text from our broker that he had a potential lender that was “excited” about our project. I was cautiously optimistic about this new “potential” lender, but also, eagerly accepted a meeting with them to discuss the project in detail. So, while our broker was sourcing banks for us, I was sourcing banks on my own. I had been in conversation with Mountain Commerce Bank, so the day that I met with the new “excited” lender and our broker, turns out, it was Mountain Commerce Bank. 😳 This was my face when they introduced me to the lender and I realized it was the same bank I was already working with. How random (or perfectly planned by God). It never crossed my mind it could be the same bank, but it was and it felt like maybe it was meant to be. Thankfully, we had already been through the credit approval process, the underwriting process, the income analysis process and the only step left was for the Board of Directors to review our proposal/project and either approve or deny us.
The days leading up to the Board of Directors meeting felt like they lasted a lifetime. But this process felt different… in a positive way. The day of the meeting arrives and it’s basically just a day of waiting around for THE phone call. The call came in and my banker, Tim, gives us the amazing news that we had been approved by the board. So, YAY! That’s great news, but most of the other banks said, “your’e approved, pending….”. So I was waiting for the pending part. Nope. No strings. Just approved.
Y’all, I cannot begin to express the weight that was lifted off my shoulders. I kept it together while I was on the phone with Tim, but the second I hung up, I completely fell apart. I was so overwhelmed by God’s faithfulness. I was so nice to make the call to Jase to give him the good news, too.
So, let this be your reminder to never give up on your dreams. 22 banks later and we finally found one to believe in us. The folks at Mountain Commerce have been great to work with and we will forever been grateful to our broker, Lou, for never giving up on us. We feel like its going to be a perfectly orchestrated partnership going forward.
