Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes
I see a lot of posts about where to go for loans for commercial properties and questions about having too many mortgages and lots of people with questionable credit but good experience, lots of capital, etc...
My question is how many of you are not with a local bank at this time? If you're with BofA or one of the other big banks you're basically just a number to them. Who do you have your personal checking account with? Do you have a local credit union?
Why aren't more people signing up with a local bank that can do portfolio loans, has a commercial lending department and they know who you are when you walk in the front door?
If you need financing, go to your local bank and ask to see the head of commercial lending. Sit down with them and explain your situation. You're now a face and not a number. Start a relationship with them. Move your savings account over, open a CD. Get to know the people at the bank. Give them a reason to invest in you and lend you money.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
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@Rob Beland I completely agree. Not only are you just a number to them, but their hands are all tied by the same underwriting guidelines of Fannie and Freddie. Not an exception to be had anywhere with the big 3. (WFC is so big they may have some they hold, but in general they are all the same!)
I'll go one further. In the wake of the bailouts and foreclosure scandals, robo-signings, etc why do we use these guys for our credit cards or banking needs at all? I'm guilty of having one national banking relationship held over from the days the little guys weren't online, but they are now. Aside from from marginal advantages anymore - the small local and community banks are the way to go for me. Support your local bank!
Engineer · Nazareth, PA · Member since 2014 · 12 posts · 1 vote
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interesting point, I bank with BOA because of the mobile apps and mobile check deposits bill pay Apple Pay etc....basically convenience of features. The people in my local branch are locals and know me well, and are very friendly. I don't get loans from them, and I have considered portfolio lending, but hadn't thought about my other business influencing the portfolio lending. Very thought provoking question.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
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@Rob Beland I completely agree. Not only are you just a number to them, but their hands are all tied by the same underwriting guidelines of Fannie and Freddie. Not an exception to be had anywhere with the big 3. (WFC is so big they may have some they hold, but in general they are all the same!)
I'll go one further. In the wake of the bailouts and foreclosure scandals, robo-signings, etc why do we use these guys for our credit cards or banking needs at all? I'm guilty of having one national banking relationship held over from the days the little guys weren't online, but they are now. Aside from from marginal advantages anymore - the small local and community banks are the way to go for me. Support your local bank!
Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes
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@Ben BardI dont a bank exists these days that doesn't offer mobile banking and online bill pay services. Set up a meeting with the head of commercial lending and tell them about your investment business. Open some new doors.
Mission Viejo, CA · Member since 2015 · 3 posts · 1 vote
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I bank with BofA simply because of their convenience and Chase had some pretty sketchy practices with taking money out of my accounts for fake over-drafts that they caused. Generally a bad experience. BofA has been O.K. so far. I have been meaning to move my accounts over to a credit union to build a more personal relationship and this post has given me a bit more motivation to do so!
Fantastic points, and creating a relationship with my local lender was a priority prior to the acquisition of my first two rental townhomes (as well as working with them now on my third rental property currently under contract). Not to mention the occasional lunch with my mortgage guy!
I swore off the Big Banks in 2009 when, as a Chase mortgage customer looking to move to Georgia for a job relocation and looking into a new mortgage loan, was told by Chase "Oh, why don't you call Quicken Loans" (Translation: Drop Dead). All that with a perfect mortgage payment history, great credit score and income. Screw 'em!
Investor · Seattle, WA · Member since 2015 · 100 posts · 59 votes
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All my personal banking is with a Seattle based credit union. My mortgages are with a local Seattle based bank as well. They have the ability to write portfolio loans, although I have not needed those yet. My mortgage banker knows me and know that I am cash flowing positive on the places I have. She knows that I will not buy a place if I cannot cash flow positive. I think (but I am new at this) that will help in the future.
As a Canadian who has lived in the USA for 13 years now I really do not understand why anyone would bank at BofA or banks like that. The local credit unions are fantastic and my experience with the local bank for mortgages has been equally good.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
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I do support local banks, unfortunately I had an experience with a local bank that closed down, my deposit was hard to get, some friends of mine only got covered up to insurance coverage that is insured by fed govt. The fear of losing your deposit is real for me, that's the reason I give to the local bank when they ask me to bank with them, although it is the same in a sense, but at least when these big banks close, either fed govt kicks in, some bigger bank buys them, or there is a total chaos which brings in more attention than that of a local bank that has only 5 branches.
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
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I may get shouted down for this, but I opted to switch all of my accounts from the banks who had a big part in taking down our economy in the first place to my local credit unions and neighborhood banks. Between the movie "Too Big To Fail" and the Occupy movements and everything else, I couldn't see supporting businesses that ran roughshod over the American people. (Yes, I know many American people played their part in it too). I cut up my BofA, Chase and Barclay's card and canceled them, despite the hit I took to my credit. I closed down the checking accounts I had at Wells Fargo and moved to a credit union. I did it in response to this initiative:
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
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We bought a property early on that we financed through a mortgage broker. Good terms, small company. However, the mortgage was sold several times and now it is with Chase. We prefer to work with local financial institutions that service their own loans. The regional banks too have some good products to offer and provide the best of both worlds.... home town friendly and big enough to offer stability, competitive rates, good features and good service.
Also, a large national bank such as USAA is a great option too for the reasons mentioned by @Account Closed. We have some USAA products (credit cards and insurance) and have been quite pleased with their service and integrity over the years.
Flipper/Rehabber · Atlanta, GA · Member since 2014 · 166 posts · 88 votes
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I understand your point.
Big banks and small banks both serve different purposes based on the reach of the services they provide. For examples, The big banks all have mobile apps, country wide branches and superior 24hr customer service. Where as small banks have localized management and quick turn around times for mortgages.
My point is you don't have to choose one. You can use both.
any good tips for finding these local banks? Do all credit unions do this?
I use a credit union in Georgia that does not offer any commercial loans or business accounts. They are a pretty big operation with 10+ locations. They advertise a lot on the radio. I was surprised to find out that they only do personal accounts. I've been with them almost 15 years.
Investor · Fall City, WA · Member since 2013 · 200 posts · 63 votes
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I have a few accounts with Chase, mortgage as well. Been with them for over 20 years, no issues. I don't really need a personal connection with them for what I need.
That being said, I have accounts with BoA as well, no issues. And I have accounts with 5 local credit unions as well (Lines of Credit, checking/savings, business).
Business accounts with Wells Fargo in addition to the others.
Each has their place and benefit, I try to maximize each ones benefits, not just limit myself to one or two.
Cedar Park, TX · Member since 2015 · 377 posts · 200 votes
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Our personal account is with a large bank and our business account si with a local bank.
I think local banks are largely avoided due to convenience. There branch may not be convenient, their on line services may not be convenient.
However, when ti comes to loans, you really should look at the relationship you can have with a small bank. An LOC was more important than branch location for us. My local bank gave em a remote teller machine so we can deposit checks at our desk. The photo app had not started when we got the deposit machine.
Rental Property Investor · Washington, DC · Member since 2015 · 278 posts · 156 votes
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I have a complicated (because I made it that way) personal finances, so I bank at a mix of banks. The majority of my banking is with the local credit union, but other banking is with Wells Fargo and a regional bank. I have them for different reasons.
The main bank is inconvenient and local, and I prefer it that way, so I'm not always in there. They have on-line banking, an app and semi-inconvenient ATMs. The regional bank is for the rental, and it serves where the one rental is. Wells Fargo is the personal account where I get to visit banks when on the east coast and the west coast. There is a branch across the street where I work, it is too convenient and so money does not stay in that bank long.
I also like the local credit union because they aren't always getting me with fees and dealing with them is cheaper. Frustrating but cheaper. I don't hear about them in the news, they are a non-profit, and because they are local they respond quickly to or are very understanding regarding local problems (like govt shutdowns in DC).
Rental Property Investor · Tucson, AZ · Member since 2014 · 63 posts · 37 votes
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Though I am not entirely experienced in this subject, I recall from some of the podcasts that larger banks like BoA can sometimes offer lower interest rates on their products under certain circumstances compared to a smaller bank or portfolio lender.
An issue I ran into a while back with financing smaller properties is that some of the local lenders I was trying to work with would not finance loans under 100K. I'm not sure how many people ran into this issue but smaller lenders would explain to me that it wasn't worthwhile for their company to lend on such small loans. However, when the broker I was working with suggested Chase bank I had ran into no problems there.
That being said my brother bought a condo a while back and used a local small bank and had no problem getting a loan for under 100K. Sometimes i think it just ends up that you use what you find worthwhile for your project. That may be large or a small bank depending on the circumstance.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
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It is good to hear there are some people out there like me that have a number of accounts at different institutions. Any time I open an account it is usually in response to financing. Two RI banks and a MA bank required accounts to go with the property financing they gave us, same with a credit union. I also have BofA - 3 or 4 buyouts after they bought my initial bank, we still have Fleet and Summit checks (and they work just fine). I liked BofA for their national presence when I traveled a lot for work. I could pretty much get money anywhere. For actual financing though credit unions and local banks are the best.
A little off topic but can anyone advise on a national bank that is good with trusts. I have tried to open with BofA and another big bank and could never get the thing to fly even providing all the paperwork? It can't be local because the special need trustee is in NJ.
Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes
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@marcia maynard I also bank with USAA. Do you use them for business loans and/or personal loans yo fund your real estate business? I am preparing to start using leverage for my future properties and am trying to find the best place (loan friendly) to build a relationship with.
Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes
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Russ Brantley I ran into the same issue with a credit union I use here in Little Rock, Arkansas. They only do personal loans. How has that worked for you with leveraging your REIs?
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
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My main checking account is with a local credit union that pays 3% interest on the first 10K on my checking account. But I also have checking accounts and all my mortgages with Wells Fargo. I wasn't happy when the mortgage on my principle residence was sold to them because they forced me to raise my flood insurance to the rebuilding cost which was 2 1/2 times what I paid for the property. Why would I rebuild in a flood plain anyhow? However, I began to use them for HELOCs on my rental properties. I'm on the BRRRR plan and have found it cheaper to refinance with HELOCs rather than conventional mortgages. Closing costs are less than $400 and that includes the appraisal. Wells Fargo will lower your interest rate after a year if you pay off a substantial portion of the HELOC, (at least 10K) then call and ask for a special rate. 60% of appraised value on a rental property and up to 80% on a principle residence. Most banks won't give you HELOCs on rental properties period, but it is the only mortgages I have on most of my real estate. By the way, if you want to borrow more off the home than you paid for it, you need to wait at least a year before applying. They will loan I'm hoping I've solved my flood insurance problem. Right now I'm trying to get a HELOC on one of properties in a flood zone but rather than get a FEMA policy I bought private insurance. I'm waiting to see if Wells Fargo accepts it. If they do I will get a policy from the same company for the one house for which I have a first mortgage.
Another reason I use Wells Fargo is because one of my properties is co-owned with my mother who lives in California. With Wells Fargo we both have easy access to our joint account where I deposit the rents. There is one other reason I work with Wells Fargo, and that is that it is relatively easy to set up business checking accounts to go with solo401Ks and self-directed IRAs. Not all local banks would know how to do this.
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
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I should add that part of the advantage of getting HELOCs over conventional mortgages is that you can borrow much smaller amounts, crucial for someone like me who buys houses in the 15-35K range. Mind you, you can't use a HELOC for your initial purchase. I literally paid for my first rental with my credit cards. The HELOC, done a year later, was used to pay off the cards and finance my next house.