Portfolio Lending dumb question

5 Replies

I have what might seem like a dumb question to most but I am a little confused and having a discussion about this with my my business partner.  A little back ground, we both have owned businesses and now want to venture together into real estate.  I am brqnd new and he has some family history in rentals.

1) What is a portfolio lender exactly?  

(I have a basic understanding of what they do as far as not selling the loan on the secondary market.)

2)When I think portfolio I think of being similar to the wall street. Mutual funds stocks etc.  I buy part of your company and hope to make a return.  My question is do portfolio lenders do the same?  They give you lets say 100k to buy 4 properties and you give them 10% back on their money every year and you never pay the house off.  it just stays in the portfolio until you sell the house etc. Can you pay off these type of lenders?  Can you pay them off early to save on interest?


I am sure I am over thinking this but I like to know what I am doing before I do it.  We are in the research stage and have quite a bit of money to invest and looking for different ways to make it happen. 

Originally posted by @Dawn Anastasi :

@Jamie Spitale a "portfolio lender" just keeps loans in their own "portfolio" meaning they don't sell the loans to Fannie/Freddie.

 Ok. Makes sense. I was confused because we approached a lender and he sent us a proforma on the houses we want and put the mortgage payment as interest only at 10%

Is this common wowiwith these types of lenders?

@Jamie Spitale  Why are you looking at portfolio lenders? Do you and your partner have more then 10 conventional loans in your name? Is your source of income through your business and not reflected on your tax return?

Portfolio loans are loans that a lender/bank holds onto and keeps in it portfolio. Due to the higher risk, the rate is higher then a conventional mortgage. Before looking at a portfolio lender, I would suggest that you 1st work with a knowledgeable mortgage banker (like me) so that they can understand your need, your financials and make the best recommendation.

Please PM me if you would like to discuss.

Upen Patel
Mortgage Banker

Medium tfsb   fdic   eh   squareUpen Patel, The Federal Savings Bank | [email protected] | (571) 331‑5161 | http://thefederalsavingsbank.com/upenpatel | Lender # National Lender NMLS# 1374243

Originally posted by @Upen Patel :
@Jamie Spitale Why are you looking at portfolio lenders? Do you and your partner have more then 10 conventional loans in your name? Is your source of income through your business and not reflected on your tax return?

Portfolio loans are loans that a lender/bank holds onto and keeps in it portfolio. Due to the higher risk, the rate is higher then a conventional mortgage. Before looking at a portfolio lender, I would suggest that you 1st work with a knowledgeable mortgage banker (like me) so that they can understand your need, your financials and make the best recommendation.

Please PM me if you would like to discuss.

Upen Patel
Mortgage Banker

 We are looking at having 40 homes in 2-3 years and the traditional route will limit our chances of doing this.