2018 Home Equity Loan VS Portfolio Lending

11 Replies

Hello all, 

I have two properties in Baltimore MD that I am trying to do cash out refi so that I can purchase another rental property. The two properties are valued at around 75k and 65k with no mortgages on it. I have done some research on the refi cost: APR and closing cost are higher because the low loan amount. Some people advised me to look into portfolio lending.

My goal is to do BRRRR. I'd like to get your opinion:

  1. For these smaller size loans, what would be a good method to do Refi? Is it a better option to go with portfolio loan?
  2. When would be the break even point for investors to switch from traditional home equity loans to business portfolio loans?
  3. Any suggestions on lenders that you can help recommend? Portfolio lenders or HEL? 

Thank you very much in advance

Yibing

@YiBing T. Hey Yibing, some banks are willing to offer portfolio lending. 

Though I have only had a sit down with Revere Bank, I think that is a lender to check out as I know they service their loans in-house and have some autonomy.

Hope this helps. Goodluck. Thanks! - Ola 

Originally posted by @Bob Green :

Hello YiBing,

How many properties do you currently have financed?  What is your 12 month goal? Are you looking to grow quickly? 

Hello Bob, none of my investment properties are financed right now. 

I am looking to expand. My yearly goal is to acquire one rental per year and hold it as long term investment. It just bother me to see few thousands out the door for each property getting financed. :) thanks for your feed back.

Originally posted by @Ola Dantis :

@YiBing T. Hey Yibing, some banks are willing to offer portfolio lending. 

Though I have only had a sit down with Revere Bank, I think that is a lender to check out as I know they service their loans in-house and have some autonomy.

Hope this helps. Goodluck. Thanks! - Ola 

Thank you Ola, I will give them a call today. Do you think it makes a difference meeting them in person or a phone call? In your opinion, which one costs more? Home equity loan or portfolio?

If you can find a local or regional bank, go with traditional financing.  Portfolio money is often used later on, after the investor has 10 conventional mortgages.    

Thank you for your feedback. I am going to try out this credit union today.

YiBing, first I'd find a smaller local bank (statewide at most) and begin to build a relationship. With them you'll have two options I'd pursue: - Work with the local lender to get you a 30 year fixed loan like Fannie that will be re sold to another bank. I'd still try to work with your local bank to get this loan to build the relationship - This bank will have the ability to do the loan themselves and keep it in house, approved by a local board at the bank. The downside here is that they likely won't do 30 year amortization and the loan will only be fixed for 5 years or so. I have really liked having a couple of relationships with local banks. Once they have your financials on file and feel comfortable with your model, financing is much simpler to get and they often can have ideas for financing you might not have thought of.

Hi @YiBing T. , I worked with a couple of banks in Baltimore City that service these types of loans. One is Revere (recommended by @Ola Dantis ) and the other one is Eastern Savings Bank. 

They offer similar, but slightly different products based on how long you've held the properties, term, maturity, rates, LTV, etc. If you are interested, send me a PM and I can refer you to the guys I work with (not sure about the forum rules whether I can or not put their names here publicly)

I suggest giving Eastern Savings Bank and Kopernik Bank a call as well, they  both do smaller portfolio loans in and around Baltimore.

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