Portfolio Loans for investors with more than 4 fannie properties

I, like of few of the other posters I have read, am running into the 4 loan limit. I currently have 7 loans and my wife has 4 loans. I have read quite a few posts about how you can get a portfolio commercial loan to either combine all or some of the conventional loans or purchase new ones. I have spoken with a few different lenders and banks locally and they have all said you can't buy or finance single family residential real estate with a commercial loan. It sounds like it is possible based on what I have read from this site, but it is a matter of finding the right lender and developing a relationship with them.

With that being said, I would appreciate feedback on the process of obtaining a portfolio commercial loan so I am more educated as I approach the banks. Does the loan need to go to an LLC or can it go to an individual as sole propriator. What levels are the lenders looking for: loan to value ratio, cash flow, credit score, etc. What kind of statements do you need to present - tax returns or more detailed pro forma statements. What kind of terms can you expect to get for a loan? Do you combine multiple properties into one loan and if so what do you do when you sell one of the properties? Do you pay for appraisals and title insurance for each property like you would in a traditional refinance or purchase? I am sure I am missing a lot of other pertinent questions so if you have any more info please respond. Also if you have any other suggestions let me know. I feel like I am stuck because I can't buy any more properties (except for seller or creative financing) and can not refinance any of my existing properties because of the 4 loan limit.

Edited: 06/26/2010 at 06:42AM

Shane Wilson

Real Estate Investor · Rocky Face, Georgia

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Icon_minipost Dec 27 '08, 11:59 PM

Talk to the commercial lenders in your towns small local community banks.

They will loan up to 75% to 80% of LTV. Loans are amortized over 15 years and balloon in 3 years. Its shouldn't be an issue to renew the loans in 3 years if you are prompt on paying. Interest will vary but will run from 7% to 8% most likely for a fixed rate.

They will require the following info:

Balance Sheet
2 Years Tax Returns
Rent Roll
Property Info - what it will appraise for, the loan amount your asking for etc.

To qualify you need a credit score above 620, debt service coverage on you properties 1.2 or above, enough cash reserves for the number of properties you have.

Appraisal and attorney fees are paid for out of the closing usually. Closing cost are usually far less then a mortgage broker.

You can combine the properties. If you sell one they just release it from the loan.

All the banks are tight right now. I would wait until things loosen up some more. With the fed lowering rates its hurting the banks pretty badly right now as far as the cash they have and their ability to loan out money.

Edited: 06/26/2010 at 06:46AM

Jon Holdman

Real Estate Investor · Denver, Colorado

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Icon_minipost Dec 28 '08, 12:13 AM

Putting multiple properties in one loan is a blanket loan. If you do that be sure to get the ability to do a partial release. That way you can sell individual properties.

Edited: 06/26/2010 at 06:46AM

Jon Holdman, Flying Phoenix LLC

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Dec 29 '08, 08:43 PM

Nate my fellow BYU fan!! I'm actually meeting with a Bank President friday to ask about the process. I'll report anything good. Thanks for donating to BP. You had enuogh money since you STOLE the house from me you bought. Welcome aboard. Rich.

Edited: 06/26/2010 at 06:47AM

Nate Dallin

Real Estate Investor · Utah

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Icon_minipost Dec 29 '08, 09:46 PM

Thanks for the feedback Rich. But ouch on the cut for stealing the house, hopefully it was and ends up being a good situation for both of us.

Edited: 06/26/2010 at 06:47AM

Owen D.

Real Estate Investor · Carter Lake, Iowa

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Icon_minipost Jan 15 '09, 08:31 PM

I actually just talked to a commercial lender yesterday at a local bank about getting a BLOC.

1. I will need to personally guarantee it (not surprising).

2. I will need to provide: Personal financial statement, 2 years tax returns, articles of organization for LLC (and EIN number), and a credit report (he will pull).

3. As collateral, I can use 80% of FMV of any stocks or CD's, 90% of cash value life insurance, 90% of assessed value of my properties minus loan balances OR 80% of appraised value of my properties minus loan balances.

I thought it was interesting that they will allow discounted collateral off of either the appraised value or assessed value, because there can be a huge disparity between the two (and assessed values are almost never accurate in my area).

This particular lender will also occasionally do commercial loans on residential properties, but they will only do a couple of those normally (which is why I'm going for a BLOC).

I am working on pulling my stuff together for them, so we'll see how this shakes out and how much I can get approved for...

Edited: 06/26/2010 at 06:57AM

J Mishkin

Handyman · OH

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Icon_minipost Jan 16 '09, 07:24 PM

I'm interested in a blanket loan as well. if anyone has any good lenders that will do this, please PM me the info.

Edited: 06/26/2010 at 06:58AM

JP Bouka

Real Estate Investor · West Bloomfield, Michigan

11 posts
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Icon_minipost Jan 16 '09, 08:57 PM

I'm also looking for lenders who will do blanket loans in MI.

Edited: 06/26/2010 at 06:58AM

Ben Carmona

· Wentzville/St. Louis, Missouri

359 posts
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Icon_minipost Jan 20 '09, 12:12 PM

Most recent guidelines from the only source I know that's doing blanket loans other than small local banks

Minimum loan amount is $750k.
Minimum value is $100k per property. These are both flexible.
As with all commercial loans, this is based on cash flow
Dscr of at least 1.25.
Rate is 7%, amortized over 20 or 25 years.
Purchase is 80% ltv, and a seller held second of 10% is allowed=90% cltv.
Seller concession allowed
Minimum credit score is 650.
Sfr and up-must be at least 5 units total in the loan.
Borrower must own properties for at least 8 months, for refinance.
Up to 80% ltv for cash out-proceeds for business use.
The use of the proceeds for cash out needs to be documented.
At closing partial release will be defined in the note.

Need a strong file-3 years tax returns, personal financial statement, etc.
Must show a profit on Schedule C of returns.

Edited: 06/26/2010 at 06:59AM

Ben Carmona

· Wentzville/St. Louis, Missouri

359 posts
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Icon_minipost Feb 06 '09, 08:06 PM

Hey Guys,

There's been some recent updates to the Fannie limit. It's been increased back to 10 financed properties.

https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp

www.eFanniemae.com
Select brokers/correspondents
Select lender announcements
Announcement 09-02
March 1 is the kick off date

Properties 5-10

720 fico
75% purchase 1 unit
70% no cash out refi 1 unit
70% purchase or no cash out refi 2-4 units
6 months reserves for all investment properties owned

* side note - properties 1-4 will require 6 months reserves for subject and 2 months for all other investment properties.

(fannie reserve changes not not mandatory till June 1 but you will likely see lender overlays prior to this date)

If you need assistance anywhere in the US with your loans please let me know.

Edited: 06/26/2010 at 07:10AM by Ben Carmona

John Pasteur

Real Estate Investor · Fresno, California

3 posts
-18 Influence

Icon_minipost Jul 18 '09, 12:28 PM

You can sometimes use a commercial lender if you hold title of the home in a business entity prior to submitting your loan for a refinance to the Lender. Once you finance out the properties they are no longer personally guaranteed and not on credit.

[SOLICITATION REMOVED]

Best of Luck!

Edited: 06/26/2010 at 09:01AM by Moderator

Jason Gray

Real Estate Investor · Fresno, California

124 posts
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Icon_minipost Jan 02 '10, 01:00 PM

I found this post on google (not bad for page 1)

However, I didn't walk away with much more info than when I started.

Are blanket loans, or portfolio loans still available in 2009/2010?

If so, does all the same criteria still apply?

Thanks a million!

Edited: 06/26/2010 at 11:04AM

Brian Levredge

SFR Investor · Long Beach, California

672 posts
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Icon_minipost Jan 02 '10, 01:54 PM

Originally posted by Jason Gray

I found this post on google (not bad for page 1)

However, I didn't walk away with much more info than when I started.

Are blanket loans, or portfolio loans still available in 2009/2010?

If so, does all the same criteria still apply?

Thanks a million!

Yes, you can still get portfolio loans. Blanket loans are also possible but harder to do. As was mentioned before, find a small local lender and look to develop a relationship with them. Unless they've changed the restrictions again, which wouldn't be a surprise, you can still do 10 loans under Fannie guidelines. There are reserve and seasoning requirements that must be met, but it is possible.

Edited: 06/26/2010 at 11:04AM