Michael Randle
Aurora, CO · Member since 2016 · 158 posts · 118 votes
8y
I have read that when people start to hit the hard cap they roll all the loans into a 'portfolio loan' or certain type of commercial loans with a small or local bank. This clears out the 10 active loan cap and you can start over again.
3 Reply
Bob Green
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
8y
Hello Jason,
You need to find a reputable portfolio lender. The amount of financed properties will not factor into approval. If the properties are located in the sate that you will I would recommend trying a local community bank first. If out of state a national portfolio lender. Local community banks in my area typically lend 3-5 year balloon -20 year amortization in the 5.5 - 6% range. National portfolio lender may offer 30 year fixed in the 6.5- 8% range depending on credit and LTV.
1 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Have spouse open 10 more under their name...
6 Reply
Derek Janssen
Rental Property Investor · Novato, CA · Member since 2018 · 110 posts · 145 votes
8y
I'm running into that also. I have heard of Exchange Bank (locally) doing HELOCs on rentals, which may help. I've refinanced and consolidated loans also to eliminate a loan.
0 Reply
Michele B.
Vandalia, MI · Member since 2018 · 569 posts · 264 votes
8y
Get a blanket, portfolio or a commercial loan.
1 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
Commercial/Portfolio loans are what you get after your 10 allowable conventional loans.
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1 Reply
Chris Masons
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
8y
After 10 hit up your local mom and pop bank for a loan. They aren't Governed by Fannie and Freddie as they will keep the loan on their balance sheet... Usually terms are very close if not equal to what you would get with a Fannie Mae loan....
If you are investing in the banks backyard that is even more favorable to them I have found...
Chris
2 Reply
Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
8y
The trick is....
Get 10 loans and then seek out a commercial lender and have them do an umbrella loan for the entire portfolio. The existing loans will all be paid off and you'll have 1 loan with that commercial lender. Now you can start all over from scratch and start accumulating your 10. However, remember these commercial loans are going to be some form of ARM (adjustable rate mortgage). You won't get a fancy 30 year locked in rate (or at least I haven't been able to find one yet).
I hope this helps!
2 Reply
David J.
OP
Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
8y
Originally posted by @Michael Ablan:
The trick is....
Get 10 loans and then seek out a commercial lender and have them do an umbrella loan for the entire portfolio. The existing loans will all be paid off and you'll have 1 loan with that commercial lender. Now you can start all over from scratch and start accumulating your 10. However, remember these commercial loans are going to be some form of ARM (adjustable rate mortgage). You won't get a fancy 30 year locked in rate (or at least I haven't been able to find one yet).
I hope this helps!
It does help but I have a question,. So suppose for a moment that I could successfully pull this off. So now I have 1 fat commercial loan and zero additional loans.
Then I go to get a 2nd loan in the form of a traditional Fannie/Freddie 30 yr fixed. Wouldn't they STILL want to see reserve funds on that FAT commercial loan? So I would still have tremendous reserve fund hurdles to over come?
0 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Don't commercial loans have net worth requirements as well (not sure if those are in addition to reserves or not..)?
0 Reply
Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
8y
I don't think it would be treated any differently than when it was 10 individual loans. You'll be required to have the same reserves whether its 10 loans or 1 large loan. You may not even need it depending on what business structure you use when you put them all into that loan. This may be a very lender specific question.
1 Reply
Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
8y
@Matt K. In reference to purchasing new property's with the commercial loan, or refinancing what you already own?
1 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
8y
You got to go with "portfolio lenders" (banks that keep the loans on their books) which for single family investors is almost always community banks. I wrote an article about it a while ago that might help: https://www.biggerpockets.com/renewsblog/find-banks-fund-investments/. Good luck!
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1 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
I don't do commercial, but I thought I remember reading somewhere you typically needed net worth equivalent to what your borrowing. And people typically partner with high net worth individuals to sponsor them for that...

But I don't do commercial so no idea if this is even remotely close to accurate.
0 Reply
David J.
OP
Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
8y
Originally posted by @Michael Ablan:

@Matt K. In reference to purchasing new property's with the commercial loan, or refinancing what you already own?
I guess I would like to know about both.
0 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
Jason J. Besides what others have said which is mostly the same stuff of “find a commercial/portfolio lender” and “this will be a local bank” There’s another option. Pay off one or more of your loans as you go.
2 Reply
Derek Janssen
Rental Property Investor · Novato, CA · Member since 2018 · 110 posts · 145 votes
8y
I'm finding with rents going up that paying off a few loans is actually doable. Whatever you are raising the rent by - apply it each month to the mortgage that makes sense. For me, it's the lowest balance 15 yr fixed mortgage. Once that payment is eliminated, all of that can be applied toward the next loan. I know I won't be making as good of return on equity paying off the mortgage, but it gets me closer to walking away from my corporate day job providing me regular income.
3 Reply
David J.
OP
Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
8y
Originally posted by @Derek Janssen:

I'm finding with rents going up that paying off a few loans is actually doable. Whatever you are raising the rent by - apply it each month to the mortgage that makes sense. For me, it's the lowest balance 15 yr fixed mortgage. Once that payment is eliminated, all of that can be applied toward the next loan. I know I won't be making as good of return on equity paying off the mortgage, but it gets me closer to walking away from my corporate day job providing me regular income.
I think about this all the time. There are so many ways to look at it. One thing is that in my case the loans I have are pretty large. Even with $1000 extra payment it would take 10 years or so to pay off my smallest loan.
Then I wonder if I even want the loan paid off in the first place. Isn't that equity better used to keep for additional investments?
0 Reply
Derek Janssen
Rental Property Investor · Novato, CA · Member since 2018 · 110 posts · 145 votes
8y
I too struggle with this all the time. My properties are in Phoenix and have lower loan balances and payments. The good thing about paying off the loans is you don't have to make that loan payment and you can use that as income. The bad thing about paying off that loan is that your return on equity is much less. Most real estate gurus I listen to say return on equity is the most important. But they are all already retired and not going to a corporate job every day. For me, the prime directive is to retire from my corporate job due to my real estate. I see that happening by replacing my corporate income with my rental income. Yeah, it will take longer. But I think it happens faster than you think or calculate on paper.
2 Reply
David J.
OP
Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
8y
You and I have the same goals. I want to leave the corporate job! Feels like it’s taking forever to accomplish
0 Reply
David Lao
Real Estate Agent · Oakland, CA · Member since 2017 · 60 posts · 25 votes
8y
Originally posted by @Derek Janssen:

I too struggle with this all the time. My properties are in Phoenix and have lower loan balances and payments. The good thing about paying off the loans is you don't have to make that loan payment and you can use that as income. The bad thing about paying off that loan is that your return on equity is much less. Most real estate gurus I listen to say return on equity is the most important. But they are all already retired and not going to a corporate job every day. For me, the prime directive is to retire from my corporate job due to my real estate. I see that happening by replacing my corporate income with my rental income. Yeah, it will take longer. But I think it happens faster than you think or calculate on paper.
Derek - It seems like it depends on what you really want. I'm in a similar situation. For me, return on equity and long-term wealth building is more important. In my experience, my cash in the bank yields nothing compared to my cash in my rental properties, so unless I have another rental property or investment, I rather just keep the cash in the rental.
1 Reply
David Lao
Real Estate Agent · Oakland, CA · Member since 2017 · 60 posts · 25 votes
8y
Originally posted by @Matt K.:
I don't do commercial, but I thought I remember reading somewhere you typically needed net worth equivalent to what your borrowing. And people typically partner with high net worth individuals to sponsor them for that...

But I don't do commercial so no idea if this is even remotely close to accurate.
When I applied for my LLC's commercial loan (which my LLC is now paying interest on) with a small bank, I had to fill out a personal financial statement because my LLC didn't have a high enough income and I am the personal guarantor.
1 Reply
Peter TverdovBusiness Member
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
8y
I know of a guy with 25+ loans who just bought a dozen properties this year. He bought them all with one commercial lender on 5 year ARMs with a 25 year amortization. That's better than a portfolio loan IMO with awful rates.
[email protected]732-289-3823
1 Reply
David Lao
Real Estate Agent · Oakland, CA · Member since 2017 · 60 posts · 25 votes
8y
Originally posted by @Peter Tverdov:

I know of a guy with 25+ loans who just bought a dozen properties this year. He bought them all with one commercial lender on 5 year ARMs with a 25 year amortization. That's better than a portfolio loan IMO with awful rates.
Peter - that's better than my 5-year ARM with a 20 year amortization. Who is the lender?
1 Reply
Peter TverdovBusiness Member
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
8y
Originally posted by @David Lao:

Originally posted by @Peter Tverdov:
I know of a guy with 25+ loans who just bought a dozen properties this year. He bought them all with one commercial lender on 5 year ARMs with a 25 year amortization. That's better than a portfolio loan IMO with awful rates.
Peter - that's better than my 5-year ARM with a 20 year amortization. Who is the lender?
Lakeland Bank in NJ. Google them.
[email protected]732-289-3823
1 Reply

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