Have 10 loans through brrr, how do I finance more?

7 Replies

@Michael Fagan

Call around to local, community banks. Many do portfolio loans and there are no limits on those. They will have higher interest rates but just factor that in when doing your analysis on a property.

Virtually any mortgage lending company or broker will have portfolio lending options. Call them and ask for their Non-QM or portfolio loans. They will know how to set up the loans and will show you all your options. 

HI @Michael Fagan ! If you're interested in continuing to do BRRRR deals one door at a time you'll likely thrive using commercial loans from a local bank. Typically in my market they are amortized over 15-25 years, fixed interest rate for a portion of that time, and at WS Prime rate + the bank's profit factor (usually 1%-1.75%). Recently that has meant rates of 5.75%-6.5% amortized over 25 years, locked for the first 3-5.

Because these are business loans they won't be precluded by the limitations on residential mortgages.

@Michael Fagan this is a somewhat common topic so I'll elaborate a little here in case this is research by others (you may know some of this already so just hang tight until the last part).

Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans....but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.  So the 10 loan max, that's a Fannie/Freddie rule.

Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually a shorter term. The most common portfolio style loan in Texas is a 20 year adjustable rate loan. These loans are easier to get but the terms are different.

Fannie/Freddie types of loans will be available everywhere and those rules might change SLIGHTLY between lenders. Portfolio loans can run the gambit. Since each lender controls it’s own money you will have to call around to ALL the banks to learn about all the programs. A mortgage broker will help with this some…but even the best mortgage brokers don’t’ have access to ALL portfolio loans out there.

Some suggestions on how to find good, local "portfolio" lenders:

  1. Post in the Bigger Pockets STATE forum that you are looking in. There are usually some good, local investors that monitor those forums. Maybe they already have a suggestion or recommendation for you? Certainly try there.
  2. Visit your local REI groups. There are many groups that meet across the country. Some post here on Bigger Pockets. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.
  3. Calling - and then there's this option. Which is what I had to do. Now, most of these smaller banks may only have 12 employees or so. So don't get frustrated if they don't return your call or aren't in the office. Just call back and be friendly. Maybe play dumb a little "I don't know if I'm in the right place..." "I'm sorry to disturb you, you may not be the right person for this....", etc. Maybe someone can get you to the right person. Again, be prepared to call A LOT so keep a spreadsheet of who you called and spoke with.

Anyway, I hope this helps some in what you are looking for.  Feel free to ask anything else and good luck!

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