For landlords, big bank or community bank?

Question

Hello all,

I have recently purchased my first rental property and am trying to find the right bank.  I'm wondering if it's better to choose one of the larger banks (Wells Fargo, Bank of America, PNC Bank, etc.) or a local community bank.  I understand that there are benefits with using community banks such as the relative ease of getting financing.  At the same time I am wondering, as a landlord who is hopping to grow his portfolio, if it is better to go with a big bank that has numerous locations near where my properties and tenants will be.  What do you all think?

Anna Watkins · Answer

Yo Nick, me again!!  Credit unions have differing levels of sophistication with their banking services -- I've used one for 20 years and they still don't have online deposits or peer-to-peer transactions outside the CU.  For my rentals, I opened a business account with Chase (thanks, Brandon Turner ;-) because of the number of branches, but mostly because of Chase QuickPay.  My tenants now all pay rent with the QuickPay app and I love it, but if they had to pay by check or cash, there are a million Chase branches around town -- no mailing or picking up.  Due is due, weekends, holidays, whenever.

Many credit unions and banks use a similar service called PopMoney.

In TN I have one tenant that doesn't do online banking, so they deposit a check or cash in my local bank there.  The lease does give them until the first business day after the 1st (if rent day falls on a weekend or holiday) -- I figure it's not fair to require them to pay on Thursday if payday is Friday but the bank is closed that day.  Not sure how that would work in Atlanta, but it's a thought.

Russell Brazil · Answer

I use a mortgage broker who will shop amongst a number of different types of lenders.

Edward B. · Answer

@Nick Brubaker

I own a few properties in several states so have stuck with the big banks for the things you mentioned. More so that I can access a branch as well as my PMs.

I am planning to consolidate in the future, though, once I stop moving around so much and will utilize a local bank at that time. If you want to use banks at all in your long term real estate goals, you will absolutely have to establish relationships with the local banks. The big banks are not really geared toward business with small RE businesses. At least not to the degree that a local bank is. Big banks will not seriously consider loans for many types of financing that local real estate investors seek and you will always just be a number to them. If you don't fit into their criteria they won't do business with you. Very little of it is relationship based at that level unless you are doing multimillion dollar deals.

In terms of convenience for your tenants, it should not impact them at all. None of mine deposit into my bank at a branch. There are numerous better options for collecting rent than that.

I would recommend the local community bank.

Jeff B. · Answer

Choosing a bank for financing is quite different than using a bank for collecting rents and holding deposits - - use that which fits your needs :)

My original purchase was via a community bank 20 miles from the property and I didn't even need to visit it in person.

My account for collections is local to me (not the tenants) and we use online collection service.

The tenant deposits are held in a Credit Union in Northern Ca, even though we're in SoCal.

Steve Vaughan · Answer

Congrats on your first rental @Nick Brubaker!  That's awesome.

Glad you are going with a community bank.  I have a very knowledgeable colleague in the Atlanta area that hopefully can help with a recommendation.  Maybe he has a sec to help out.  Hi @James Park!

Anna Watkins · Answer

Ditto what @J Beard said about financing -- I only have one mortgage where being a bank customer matters, and that's a commercial portfolio loan at the local bank in TN.  Especially for your first few loans, you'll probably get better rates and terms from a regular residential loan, and those are usually resold within minutes of closing, if not before!  Last year I had one where the notice of resale was actually included in the closing documents.

Nick Brubaker · Answer

Thank you @Steve Vaughan and @Russell Brazil.  Yes, I would like to hear from James Park.  I am considering going with Delta Community Credit Union.

Nick Brubaker · Answer

This is really helpful @Edward B.  Thanks for responding.  I guess I should look into typical methods people use for collecting rent, since that was the main reason to go with one of the big banks.  I'm also wondering if the big banks offer more options for businesses in terms of things like setting up multiple accounts for things like security deposits.

Can anyone recommend a good community bank in the Atlanta / Decatur areas of Georgia?  I have yet to find any consensus in my online searching.

For landlords, big bank or community bank?

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