Mortgage loans can be come from a variety of sources, private individuals, banks, mortgage brokers, mortgage bankers, credit unions, etc.
Investors need to understand that in most cases these lending sources are not actually making their own capital available for a mortgage. Instead, they are acquiring or borrowing the funds from another party. Pension fund, hedge fund or insurance company can and do provide liquidity to banks, credit unions and lenders.
Portfolio lenders have the ability to lend from their own funds. This means that they are able to make loans available at any terms acceptable to them. In many cases, this means that a portfolio lender will have funds available with less restrictive qualifications than a conventional lender.
Why is this important to an investor?
In today’s market place conventional financing can be difficult for investment properties.
Below or the top 5 reasons to find a portfolio lender:
- Can lend to individuals that own more that 10 properties
- Can self insure their loans which allows them to finance 90% of purchase price
- They utilize compensative factors to over come deficiencies
- Allow deposits into their bank to help qualify
- Can cross collateralize other properties
There are a number of benefits to using a portfolio lender or bank, but be prepared to have a higher interest rate, high closing cost or both to utilize this out side the box lending source.
Article Author:
Troy SchurichtTroy has written 30 articles for us.
Visit Troy's Website: http://www.communityfirstfinancial.com
Joshua Dorkin
Charles Feldman
Ted Karsch.
{ 11 comments… read them below or add one }
Good stuff, Troy. Most smallish investors just don’t know these things. It’s probably portfolio lenders who will bring mainstream lenders back to investors with a better attitude.
And it’s not more than 10 properties now, it’s more than 4, thanks to recent Fannie Mae changes, right?
I’m not sure if its more than ten, didn’t they change it recently?
4 is the new number, but mainly for less than 20% down. We’re turnin’ into pretzels figuring this stuff out on the run. It’s a maze, and there’s no map, even for the lenders/underwriters.
Very interesting blog some great new information here, I will be back!
Where do we find these guys?
I agree, it will take these small portfolio lenders to “push the envelope” while all other banks are tightening up to what seems like ridiculous standards to bring the mainstream back to reality.
Things did get a little out of control, but the pendulum has definitely swung the other way right now.
Banks are virtually out of the lending business due to the severity of the liquidity crisis. They will only write paper they can sell, and secondary mortgage market is off as-much-as 90%. Private lenders are the way to go today. We are using hedge funds and private firms to fund commercial real estate deals today. The cost is much higher in-terms-of rates and points, but whatever the cost it’s cheaper than losing the deal!
nice tips .we got more information after reading this post
I am a loan officer that has clients with special financing needs.
I have clients that have 10 or more investments properties that wishes to refinance some or all of them at some point in time
I have clients that havenot so good credit that wishes to invest into real estate
I have investors that wishes to flip properties
My goal at this juncture is to partner with a company that can help me satify their needs
Can somebody share the names of those portfolio lenders that allow more than 10 properties? Post the name here. Thanx.