There are many possibilities when investing in real estate. In addition to the types of investments you can make, such as a single or multifamily property, you also have options for funding your investments. One of those options is Credit Unions.
A nice thing about credit unions in particular is the cooperative community aspect of their framework. Unlike banks, credit unions work cooperatively together to provide funding capabilities beyond the individual local credit union you might be working with.
The relationship you have with a community bank or credit union works much the same way. The better you get to know one another, the better the rates you’ll receive, the more refinancing opportunities you’ll have, and so on.
However, it is fair to say that a lot of people don’t really understand the distinction between credit unions and banks. In this article, we will walk you through everything you need to know about them and how to leverage their support to kickstart your investing career.
Credit unions and you
In America today, over 100 million people belong to credit unions. Some people belong to them simply because they worked for a particular organization, or their parents signed them up. Others join credit unions for the benefits they can provide for their members.
Essentially, a credit union is a cooperative financial institution. It is owned by its members and run by an elected board of directors. Not only does this give members greater control over interest rates and other factors affecting their bottom line, but it also gives them access to credit loans with more favorable terms.
Since credit union members often have real estate investment needs, credit unions fund a variety of residential and commercial property investments.
The benefits of using credit unions
There are good reasons why many people are now looking to use these types of loans to fund property ventures:
- The lack of a pre-payment penalty. No credit union in the country is able to assign or enforce pre-payment penalties.
- Loan rates are very attractive. Since credit unions are typically able to offer lower interest rates than banks, but now rates are lower than ever.
- You are not locked into a loan when working with a credit union, which means you can take advantage of this declining rate market.
Can I take a loan to invest in multifamily properties?
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Of course, you can! Credit unions provide loans for multifamily apartments, single-family dwellings, warehouses, office space, and nearly every type of property. They can also network with other credit unions across the country.
This means if you want to do something, chances are there is a credit union willing to work with you.
For example, let’s say you have a several-unit building currently rented and stabilized, but you want to make some renovations to increase its value and profit potential, like Viva Max, our latest opportunity for investors.
The odds are in your favor of finding a credit union to back your investment costs. Of course, its current as-is value, as-completed value, and the renovation costs will be taken into consideration.
Qualifying for a credit loan
Unlike the big banks, funds, and investment companies, credit unions actually want to know who they are dealing with. This is true whether you are just starting out or have already executed several profitable property deals. They want to know your story.
They also want you to get to know them. Whether it’s a five- or seven-figure loan request, you can speak to whomever you want to get your questions answered, and in many cases, even meet the CEO.
Of course, credit unions will also want to look at a property’s financials. However, this is only one aspect of what they’re looking for. Rather than just granting or denying a loan request based on cold, hard numbers, credit unions also want to get to know you, the investor, and discuss what you are looking to do.
Additionally, credit unions offer better loans and more loan opportunities to investors they know and have already done business with.
Are there limits to certain types of property or individuals when requesting a loan?
Credit unions will lend to just about anyone for nearly any type of property. While there are some credit unions that won’t finance a hotel and others that won’t lend money for a restaurant or strip mall, there are plenty of other credit unions that will.
The key to being approved for a credit loan is showing how you are going to pay it back. Of course, the numbers have to work, and the deal has to make sense, but it really comes down to relationships and showing your ability to repay your debts.
The bottom line
If you want to make your journey into investing easier, and you have good credit and some experience, Credit unions are your best shot at securing equity for your next Real Estate investment.
The benefits far outweigh other forms of investments when you meet the necessary requirements, and it will allow you to start building enduring wealth for yourself and your loved ones.
We believe creating wealth is also about giving value to others. For that reason, we have prepared a short guide to get started in real estate passive investing.
Download it now to learn more about syndication, the multifamily asset class, passive investing, and more!