Bay Area Portfolio Lenders

8 Replies

Hey BP. My group is engaged in residential rentals under an LLC and we've been struggling to find portfolio lenders in the Bay Area California with reasonable terms. We've come across a few lenders that have quoted in the mid to high 5% range and another at 4.75% but with 40% down which also kills any cash flow on a deal.

Appreciate any guidance you can provide!

Originally posted by @William Yeh :

Hey BP. My group is engaged in residential rentals under an LLC and we've been struggling to find portfolio lenders in the Bay Area California with reasonable terms. We've come across a few lenders that have quoted in the mid to high 5% range and another at 4.75% but with 40% down which also kills any cash flow on a deal.

Appreciate any guidance you can provide!

Hi, William, I assume you want to keep all under the LLC, when you say Portfolio are you looking to refinance or purchase multiple properties? are you looking to keep all properties under the same loan? please advice

Originally posted by @William Yeh :

Hey BP. My group is engaged in residential rentals under an LLC and we've been struggling to find portfolio lenders in the Bay Area California with reasonable terms. We've come across a few lenders that have quoted in the mid to high 5% range and another at 4.75% but with 40% down which also kills any cash flow on a deal.

Appreciate any guidance you can provide!

 A Fannie Mae loan for $500k might sell on the secondary market for $515k.

A portfolio loan doesn't have that, by definition, so it's got to be made up for somewhere else. 

Any investment bank can park money on Wall Street and earn 7% or 8%. If you're not offering to beat that (all-in after fees etc), why would anyone lend you money? 

@Guifre Mora Yes the goal is to keep it all under the LLC and not involve any individual partners of the LLC. Someone floated the idea of getting the loan in an individual's name and then quit claiming to the LLC but that's too messy.

@Chris Mason Well given that I've already got loan offers better than what your suggesting is technically possible, I guess the universe is imploding?

Originally posted by @William Yeh :

@Guifre Mora Yes the goal is to keep it all under the LLC and not involve any individual partners of the LLC. Someone floated the idea of getting the loan in an individual's name and then quit claiming to the LLC but that's too messy.

@Chris Mason Well given that I've already got loan offers better than what your suggesting is technically possible, I guess the universe is imploding?

Not really; I didn't imply any particular terms or interest rate. Just providing context, often times people are shocked that non-FNMA loans don't get FNMA type terms and conditions, that's the reason. :) There is an emerging secondary market in the non-qm space, it's not nearly as sweet as FNMA to the banks, but it can blunt the impact a bit, as you are finding.

Originally posted by @William Yeh :

@Guifre Mora Yes the goal is to keep it all under the LLC and not involve any individual partners of the LLC. Someone floated the idea of getting the loan in an individual's name and then quit claiming to the LLC but that's too messy.

@Chris Mason Well given that I've already got loan offers better than what your suggesting is technically possible, I guess the universe is imploding?

You will be looking at a investor lender non-resource vesting under the LLC. 60% LTV is usually seen for risky deals but you are able to get good rates as there is more skin on the game under the commercial lenders.

A few portfolio lenders (with local presence/representation) I've found that have good programs:

  • First Republic Bank: can get to low 4s for strong borrowers. 70 LTV max for investment. No issues lending in an LLC. I've had great experience with them. They just get it done without hassle.
  • JMAC: has some interesting non-qm programs (check out their Newport product; a very detailed program overview is on their website). They're wholesale only so you'll need a broker to access. Will go to 80%+ LTV on investment, but you'll pay a big premium for it on points and rate going over 75 LTV.
  • California bank and trust: 70 LTV max without an exception. Rates in mid - low 4s recently. Max loan amount of $1 mil for their portfolio product.
  • Fremont Bank: have a portfolio product as well. 

Happy to make intros if you need them. 

@Chris Mason Appreciate the additional context. Yes the Fannie loan deal is always the sweetest deal but sadly not available for businesses. I'm seasoned enough in the business that I don't get shocked too easily ;)

@Matt Ward Thanks for the gut check.

@K T. That is a super helpful list. Yes would love to get intros. Will PM you.