Local banks and credit unions vs big banks

4 Replies

All,

I've heard that building local relationships with banks and credit unions is better than big banks.  What questions do you need to ask to make sure they will be able to provide services to aspiring real estate investors?

Example: I just had one credit union say they don't do 30 years fixed terms. They will amortize over 20 years and have loan maturity every 5 years. This is similar to an ARM, except it wouldn't be interest only. Has anyone ever had this? Also, if you are doing BRRRR on a property, wouldn't an amortization of 20 years really hurt cash flow since payments would be so much higher?

Thanks!

@George Clark

Thanks George.  I'm looking for a relationship with a bank that can extend me a line of credit for rehabs, can lend me money for purchases, can refinance houses that have been rehabbed and rented.  As a lender, have you ever heard of the above:  "They will amortize over 20 years and have loan maturity every 5 years. This is similar to an ARM, except it wouldn't be interest only."

Sounds like a balloon. The payment amounts will be as if it was paid over 20 years. In 5 years the loan is called due, and restructured based on market conditions at that time. Never written one.  I cannot speak to their specific product. I would venture to guess a fixed rate product would be better, no prepayment penalty, less chance for the "chef surprise" down the road. I would be happy to help you with any of your finance needs. Please let me know if that helps to answer your question, or i can help going forward. 

@Mauricio Quintana I'm thinking about this same exact topic right now as I'm looking to get started with my first rental property. I've always banked with big banks, but now use an online bank. In one of the podcasts, Brandon/David talked about how they wished they had chosen one local/community bank and built that relationship with them for all their deals. I think I may explore that route as well. Keep me posted on what you decide to do!