I am in California.Cash for keys is always an option.

My question is should I keep working with this small local bank, is this a good deal, can I get a better deal, what are my other options for scaling as a small real estate investor.

What are my options now?

They are nice and guests like them, but obviously there are much cheaper options on Amazon. 

Once you get a flavor for lending options you should run a proforma and determine how much return the project will be able to generate on its's own and how much return will be left for LP investors if you go the syndication route.

Or renting out by room can be an option for better CF. 

It might not cashflow well as a rental/because it's a single family but if you can make it break even for the time being with a tenant, not a bad option as well.

Hey Alvin,Yes investment HELOCs are an option depending on the details. 

If it's revocable, then there should be options but it's important to let them know up front so there's no surprises.

I know as the Lender, I always have the option to modify things but the NoD helps set the stage if the borrower doesn't act or respond in a way I feel is beneficial to getting the project across the finish line and me my capital back.