Local credit union vs large bank?

Question

Eric Gabriel · Answer

Credit Unions!  Select a co-op credit union if you will have properties in various states.  The co-op is larger than the largest bank (BofA).

Co-opcreditunions.org

I returned a cashiers check mistakenly written to me for $1,000,000 by BofA.  They returned the favor by shutting down my business account.  I seriously love credit unions and the co-op network.

Charley C. · Answer

I can get local banks up to about 4 million but once I go over a even a mill, then my loan officer has to ask more branches to sign off. However, your question is about whats better local banks/credit unions or big national brands. The big national brands are completely useless to any emerging business be it real estate or otherwise. All real economic booms I actually felt, came from a strong emergence of small business with the funding from their local small banks. Big banks to me are only good for buying consumer products I probably shouldn't be buying in the first place. Before calling the loan officers and setting up an appointment, go to their website and search locations, start with the bank that has the fewest  branch locations. They well need to be located nearest the property you want to buy. That is what works for me

Todd Dexheimer · Answer

Depends. Local banks are great for loans up to $1mm, if you are local to the property as well. They are good for distressed properties or properties with sloppy books.

Large banks are good for larger loans, but more stable properties. They also can work with you if you're investing out of state, especially if they have branches in that market. They have a lot more red tape than the local banks.

Fannie Mae/Freddie Mac/HUD/CMBS are good for larger properties over $1mm in loan size. They offer non-recourse and 30+ year amortization with longer term. These have the most red tape and are strict on requirements. They cost more up front and on the back end if you sell before their early payoff penalties expire.

Check out an article that I wrote on getting financing for an apartment:

https://www.biggerpockets.com/blogs/10145/72001-ge...

Bo Goebel · Answer

No need to decide now. You should be working on both sets of relationships concurrently... then whenever financing that property you get under contract comes up, you make a choice. On average, local banks/credit unions are better to work with on anything smaller than $1 million. Larger than $1 mil, big banks can have some more competitive terms.

Elbert D. · Answer

It depends how fast you plan on scaling. Your DTI still cant be too high. I would say do a combination of Hard money loans and private money loans then Refi to the credit union and local bank terms. Also research the BRRR stragety since you are planning on acquiring rentals. Good luck with being a landlord.

Sam Rust · Answer

@Sherman Dunn I look at Fannie/Freddie financing on a recent purchase, but ended up using a local credit union. The terms were much better through the credit union, 1% lower interest rate, 30 year term, 75% LTV. the advantage to the federal loans is the ability to take out non-recourse debt, but for us the other perks outweighed that value.

Jaysen Medhurst · Answer

@Sherman Dunn, I would concentrate on local/regional banks/credit unions. They'll have a lot more flexibility and provide better customer service. Until you're really big, a large bank just can't be bothered with you.

Depending on the size of the deals, you should also be exploring financing through Fannie / Freddie. They finance large multi-family properties with very attractive terms, albeit you'll have more red tape...

Sherman Dunn · Answer

Thanks man, I’m going to explore a few local banks and hopefully they’ll work with me.

Local credit union vs large bank?

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