can someone please explain to me the whole concept of portfolio lender and whats the difference with a regular mortgage ?
Portfolio lenders not only originate mortgage loans but they hold a portfolio of those loans rather than selling them off in the secondary market. Many mortgage lenders avoid the risks of holding the loan, they profit from origination fees and selling them in the secondary market. Portfolio lenders hold their mortgages and profit from origination fees as well as the difference between interest-earning assets and the interest paid on deposits in their portfolio.
Hope this helps!
@Shai Buki may I ask are you looking for a portfolio lender? I had a discussion yesterday with a local bank but didn't quite get my answers from them. I wanted to speak with a portfolio lender to learn what I need to see if there is a case for me to use one. I asked specifically if they were a portfolio lender but what I got was an explanation on the difference between the 2nd-dary market and a commercial loan. That wasn't necessarily helpful.
@Sean McNamara thanks for the simple explanation. How does one go about finding a portfolio lender and what questions should be asked to get the right answers? My questions to the local bank didn't prove fruitful. I did find out that 4 mortgages in the secondary market are the max one can get, which is why some I suspect go to commercial loans or other financial resources. i know that for a multi-family over 4 is considered commercial.
@Daria B. I don't have any personal recommendations for portfolio lenders. Normally I would tell you that your local bank would refer you to a portfolio lender upon request once they recognize that they cannot provide the financing you are looking for. However it sounds like they were of no assistance. RE agents in your area are likely familiar with portfolio lenders. Another great way to discover portfolio lenders is to attend a local REI meetup, investors in your area with experience will have recommendations without a doubt. You could even ask a title company what lender other investors in your area use when financing rental portfolios. And perhaps the easiest way to find portfolio lenders is good ole Google, just search for one in your area.
I am not sure what you mean by what questions you should ask the lender, could you elaborate?
Sure @Sean McNamara what I meant by questions are those that would help me with beginning dialogue to a local banker to find it they do what you described is a "portfolio lender".
On my trip to the bank yesterday I talked to the President who deals with commercial loans. I asked if they were a portfolio lender, knowing enough that if they were they would hold the loan and would not sell them, but he didn't answer my question. He started talking about the difference between the secondary market and commercial and that I should look to the secondary to max out the 4 mortgages. During the conversation he asked how many I currently had, which is 2 from the secondary market. This of course I thought was not good advice because he doesn't know my circumstances and it should be that all the financial options are looked at rather than give a blanket statement as he did.
But I digress, I'm trying to learn about options other than what I've always looked toward, which is a fixed 15 or 30 yr at x rate. I'm reading a lot of posts about other investors and the better financial options they seem to have.
I did Google for portfolio lenders but the descriptions were no where near what you described. I've just not hit on the right verbiage and now that I have a better description I can revisit Google. I also looked for REI and nothing came up in my area. I know there have to be investors here I've just not found them yet.
@Daria B. Here is a great article with all the answers you are looking for. They go in depth as to what questions to ask a potential portfolio lender and I highly recommend the read: http://investfourmore.com/2013/05/how-to-find-a-po...
@Shai Buki I think you will find that article to be informative and helpful as well.
The most important question in my opinion are basic: Are you a portfolio lender? If yes, you're in the clear. If no, you know to look elsewhere for financing. If they deflect (like your bank did) be specific. Do you lend to investors who already have 4 mortgages? Do you sell your loans or keep them in house? Do you allow an investor with four or more mortgages to do a cash out refinance? Do you have a commercial loan department?
Obviously you want to ask about origination fees, terms, etc. all the standard questions when approaching a potential lender.
As far as finding other investors you can head to Find Members under Network (http://www.biggerpockets.com/meet). You can also look for meetups and events in your area at Network > Events and Happenings (http://www.biggerpockets.com/forums/521-events-and...).
Hope this helps!
Thanks for all your Help :)
Im going to read the article that @sean mcnamara suggested and i hope it will clarify it all
thanks once again :)
Oh my gosh @Sean McNamara I will be reading for days and days. I subscribed to Mark's newsletter to get additional information. Very interesting read on his rental property #5, calculators, and overall strategies he employs.
I also downloaded the flip and fix calculator and found that company has a rental calculator that should help me.
At this juncture I also am trying to narrow down and decide on one set of tools. I started with my own spreadsheets and then began finding others that had most of what I needed and more of what I didn't have yet. Though what I've found is, if I enter the same numbers into multiple sources of spreadsheets I get different answers so they must be using different calculation methods or including/excluding $$$ in the line items. Like I found one spreadsheet that didn't include PM fees as part of the Expenses. I have always done that and I found some others also include these, but in that one case that person did not.
You have been a tremendous wealth of information thanks again!
ya i will be doing the same thing alot of reading lol
but i was told some time knowledge is the best asset for real estate and of course everything else
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