Should I switch all my banking to a small bank?

[Adam Craig]

I have baked with Chase for 10+ years. They hold 80% of my accounts. Between 3 business I have 4 checking accounts and 3 credit cards with them. They are great with customer service and technology but cant do much for me with real estate investing.

I have a lending relationship with a very small bank. They finance 12 of my single family homes through commercial loans. The banker contacted me recently and said he could possibly offer me a line of credit as a second position on the equity on those 12 properties as high as 250K )(depending on appraisals) which I know is rare because I called dozens of banks looking for LOC as second position on rental properties.

He sent it to underwriting and they said since I have no accounts with them they could only do 50K. If I move over some of my business and they see my solid cash reserves they can go 100K and likely hit the 200K number after they get to see my activity.

Is this worth it and should I do all my business with a smaller bank at this point? In hindsight I should have established a relationship with a smaller more flexible bank long ago. But now the daunting thought of switching everything over... Quickbooks/websites/ect is hard to swallow.

Thoughts?

[John Kennedy]

Adam: I'm very familiar with your dilemma...I also have banked with Chase for (too many) years, and have rental properties financed at a small local bank. It sure seems like a no-brainer that you should switch at least one or two accounts over to the smaller bank to show a little love (and get the line of credit increase). I guess it comes down to how badly you want that LOC. I will say that the small bank I use did NOT make that requirement of me in order to extend a healthy line of credit...and it seems a little petty of your bank to coerce you that way, considering the amount of biz you are already giving them. I suppose you could suggest to your small bank banker that if they don't give you the bigger line of credit you might have to shop your mortgages somewhere else (but if your existing rates are really good, that's an empty threat!)

I hesitated to switch to the small bank for checking accounts (we also have three separate businesses), because there's a Chase on every corner around here (Indy), while the small bank is 30 minutes away.  But, I agree, Chase is totally useless when it comes to helping out with any real estate financing.

So, just how bad do you want/need that LOC?