Expereinces with portfolio loans (creit line)

2 Replies

Happy 4th of Jjuly

I am considering a portfolio loan. I am looking for a way to further leverage my portfolio and the equity in it. I would like to free up some short term cash. My goal would be to have a credit line type of loan. The ideal situation would allow me borrow and repay it as often as I need. The funding fees and minimum holding time on hard money are prohibitive.  Has anyone used this type of financing? 

I think there are two different types of loans. One is a line of credit against your portfolio or a portion. A local, smaller bank or credit union is most likely going to do this type of loan. They are rare because it puts banks in second position so LTV would be low.

Portfolio loans are more often a bundle of mortgages for several properties for say $500k.   You agree that you'll maintain this $500k loan for at least 5 years.  If you sell a property in the portfolio, then you have to replace it with another similar so loan quality remains in tact.   The bigger hedge funds had products like this.  Not sure if it's still around.

Sounds like the LoC is for you, but it's going to be hard to find.

@Lesley Resnick , I'm not sure what local banks are doing and I have yet to find any institutional lender willing to do a line of credit backed by investor properties.  Portfolio loans are definitely available.  You need at least 5 properties and minimum loan is $500,000.  Those will be 1st mortgage loans, so you will be refinancing any existing loans you have on the properties.  These are not Fannie Mae loans.  They are based on the cash flow of the property and do not consider other income.  They require more paperwork than individual loans they you can expect 60 days to close.  If you sell a property, you will need to payoff that property's loan + 20%.  

The only advantage I see to a portfolio loan is writing few checks each month for the mortgage payment.  You have far more flexibility doing individual loans.  


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