Finding a portfolio lender

Private Lending & Conventional Mortgage Advice
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Finding a portfolio lender

Brent Kelley
Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes

I recently closed on my 10th property and, according to Fannie Mae, I'm cut off! I have been looking into other options such as blanket loans and portfolio lenders, so that I can continue investing. From what I understand, a portfolio lender is the way to go. However, I'm having trouble finding one in my area... that will do loans out of state. I live in California but my rentals are all in other states (since California is ridiculously over-priced). Any tips on what to do or how to find a lender that will accommodate me? Am I searching for something that doesn't exist?? Thanks.

-Brent

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Antonio Guillen
Stone Mountain, GA · Member since 2014 · 10 posts · 2 votes
11y

why nobody is naming a single lender? I need names please.

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  • Douglas Dowell
    Denver, CO · Member since 2012 · 350 posts · 175 votes
    12y

    Hello Brent,

    One positive out of dodd-frank is it provided a weird loophole to that in effect encourages lenders to enter the portfolio loan space.    Blanket loans became a dirty word from 2006/2007....but they are back in full force with a few great choices.

    1Reply
  • Eddie T.
    Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes
    12y

    What states are your rentals in this will help so people here could recommend certain lenders.

    1Reply
  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Thanks Douglas. From what I understand about Dodd Frank, it mainly affects us (as investors) if we want to sell properties to consumers and carry the note. How does the law encourage lenders to engage in portfolio lending? Regardless, its good to hear that blanket loans are back and becoming a decent option. 

    Eddie, my properties are in Memphis (TN), Jacksonville (FL), and Birmingham (AL). Thanks guys.

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    12y

    we are in the process of working with a lender who does portfolio lending. In process on putting 4 into one loan. Fingers crossed. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
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  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Good luck Curt! I might be looking into something similar soon, if I can find a good lender. What kind of terms are you looking at on the loan? Is it fixed or adjustable?

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    12y

    @Brent Kelley congrats on getting 10 good loans.  I only made it to 4 and went the portfolio route.

    If you plan on investing in the Visalia Tulare Fresno area I know of a few portfolio lenders.


    Frank

    0Reply
  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    Frank what percent down do portfolio lenders want in our area?

    0Reply
  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Thanks Frank. I appreciate the info! Good luck on your upcoming refi. Sounds like a good opportunity to buy some more places.

    0Reply
  • Account Closed
    Residential Real Estate Broker · Birmingham, MI · Member since 2014 · 179 posts · 54 votes
    12y
    The introduction of qualified mortgages (QM) as a provision of Dodd-frank recently enacted (Jan '14) could serve to promote portfolio lending as fewer and fewer loan products are eligible for delivery into the secondary market.
    0Reply
  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Thanks Mark. That makes sense. 

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    12y

    Portfolio lenders, by their very nature, tend to be small to medium size banks that only lend in their respected areas because they are going to have to manage the property if the loan defaults.   

    I would recommend you look for small/local banks in the areas your homes are in. A good place to start is with the local realtors. If you used one to buy those homes, I would check with them. They seem to know which banks are doing investor loans.

    If not, then try calling the banks directly. Look for any bank with a name that you don't recognize. :-) i.e. Bank of America, Chase, etc are not going to do portfolio loans for SFH investment properties.

    You still may have a bit of an issue being an out of state investor as investment properties are considered to be risky loan as it is. But out of state is even moreso.  Then again, it also depends on what are you're in too. If you're in areas like Texas, I can almost guarantee that you'll be able to find someone to do that. They seem to have the best lending environment of any state in the country. 

    But I would definitely recommend starting there.

    One other key thing to note. You MUST have a corporation (likely an S Corp) to refinance these properties in. If you don't, there's no point in refinancing. If you refi them in your personal name, they will still count against your limit - even though they are "portfolio/commercial" loans. 

    And, from what I understand, Fannie Mae changed their guidelines so that even loans you have under an LLC will count against your 10 limit as well.

    1Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    12y

    @Elizabeth Colegrove 30-35% down.  Most of my portfolio loans were created by refinance.  Not to many lenders will prequal you to buy a dilapidated property.  It is hard to create new value/equity when you buy a turn key property.  

    Frank

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    12y

    My experience is most portfolio lenders want a "relationship".  Especially with the regional banks.  It is hard to have a few portfolio lenders and a few relationship.  Your money will be scattered around at multiple banks.  That is kind of where I'm at and why I'm refinancing some portfolio loans into a blanket loan. 

    0Reply
  • Antonio Guillen
    Stone Mountain, GA · Member since 2014 · 10 posts · 2 votes
    11y

    why nobody is naming a single lender? I need names please.

    2Reply
  • John Marshall
    Washington, D.C. · Member since 2013 · 11 posts · 3 votes
    11y

    Brent, 

    There are plenty of non-bank institutional lenders that have entered the SFH rental space with 25/30 year am schedules. It's actually pretty competitive in my experience (investor rates +2-3% ish). A quick google search should do the trick. Good luck!

    0Reply
  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    11y

    Thanks for the info John. I'll check it out!

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    11y

    @Antonio Guillen if you're looking for names of lenders you will need to post in the Marketplace.  

    0Reply
  • Anthony ThompsonPro Member
    Buy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
    11y

    PJ, I'd say start with a local bank or credit union that you already do business with.

    If you don't already do business with any of them, I'd say start keeping your eyes open for whichever ones are near your home, since you'll want it to be convenient.

    Once you start to be on the lookout for them, you'll start to see them everywhere, at least that's what happened with me :)

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    11y

    Again, requests for specific lenders cannot be posted in this thread, nor can specific lenders be recommended.  Requests for lender must go into the marketplace. 

    0Reply
  • Robert Sepulveda
    Lender · Newport Beach, CA · Member since 2013 · 264 posts · 97 votes
    11y

    This may be a dead topic by now, but I wanted to throw my two cents in.

    There are nationwide portfolio lenders that will help you. Usually if you already have 10 or 100 loans elsewhere, the portfolios will allow 10 properties with them specifically, and some will only consider the debt and income of that particular property. This can help offset some properties that may be negative in cashflow and that would other wise hurt your dti.

    I'm late to the discussion but let me know if I can offer any more advise.

    0Reply
  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    11y

    Thanks Robert. For somebody who has 10 loans with conventional lenders (and are therefore maxed out), would you recommend they use a portfolio lender for the 11th property? Or would it be better to put the original 10 into a portfolio loan, thus freeing them up to start over again with conventional loans?

    From the research I have done, it seems like the terms offered by many portfolio lenders are undesirable (adjustable mortgages, higher rates, etc). Its hard to stomach the idea of putting your properties into a loan that will cut into your cashflow (higher rates) and increase your risk (adjustable mortgage).

    Thanks,

    Brent

    2Reply
  • Jared RineBusiness Member
    Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
    11y

    @Brent Kelley

    I think it depends on who you utilize as far as portfolio lenders are concerned. I know everything you pointed out are concerns for a borrower, but I think there are lenders who do a pretty good job with mitigating concerns you pointed out. For example, some of the lenders we work with will do up to 75 LTV, 30 year amortizations, 5-30 year terms, fixed rates anywhere from 5-7s depending on length of term. That's not too bad considering some of the terms I've seen and I'm sure you've seen out there. That's even aggressive from conventional wholesale non-agency loans.

    If I were you, it's a running of numbers - how much would it cut into your cash flow if you did put all 10 properties into a portfolio loan?  Then there could be questions of liability.  Is recourse/non-recourse a factor, which is a possibility on these portfolio loans.  Things to consider.  I thought I'd add my .02.  Feel free to ask more questions or contact me.

    Thanks,

    Jared

    Jared Rine United Lending Partners53 Reviews
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  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    11y

    Thanks Jared. I appreciate the info.

    0Reply
  • Jerry Poon
    Real Estate Investor · Los Angeles, CA · Member since 2014 · 236 posts · 67 votes
    11y
    Originally posted by @Brent Kelley:

    I recently closed on my 10th property and, according to Fannie Mae, I'm cut off! I have been looking into other options such as blanket loans and portfolio lenders, so that I can continue investing. From what I understand, a portfolio lender is the way to go. However, I'm having trouble finding one in my area... that will do loans out of state. I live in California but my rentals are all in other states (since California is ridiculously over-priced). Any tips on what to do or how to find a lender that will accommodate me? Am I searching for something that doesn't exist?? Thanks.

    -Brent

     Did you get to a 10th loan through a traditional loan? How did you forego the debt to income ratio?

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    11y

    @Brent Kelley 

    I have had many struggles preparing and convincing portfolio lenders.  My most effective communication to them has been through written letters.  I just uploaded a few of my letters in the BP Fileplace.  Hope they might help.


    Frank

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