I would like to consolidate the 9 30 year fixed mortgage (currently in my name) into one loan and open up a revolving line of credit to move on additional deals.

The nine houses have 70% equity.

I’m a professional engineer by trade, this small portfolio , valued at 2.9 million, took me 15 years to assemble it cash flows very well I’m conservative but interested in how to grow

Thanks for your suggestions. 

Hey Ben,

I'm going through the same thing right now with little luck during the corona-virus pandemic. But I'm hoping someone on here will have solid advice. 

@Ben Kniesly and @Cameron Tope you need to dial for dollars, ie call as many small banks and credit unions as possible and ask for them if they are doing any portfolio lending right now. You could also click on the Network tab here on BP and search for lenders. Lastly, post on your local forum and ask for referrals. If your portfolio is cash-flowing, someone will want to loan you money. Find them!

You didn't ask a specific question but I assume you are asking how do I grow with a 10 loan limit.

Why do you think loans are limited to 10? They are not. Obviously there are owners with not just hundreds but sometimes thousands of properties. You just have to look for different types of loans.

Follow the advice or @Brian Gerlach and ask around for different loan products. I would add to call mortgage brokers and commercial lenders. You could refinance you 9 properties with a blanket loan and then start al over with 10 conventional mortgages again. 

@Ned Carey & @Brian Gerlach  

I appreciate the advice and have called numerous banks. The problem is I have about two dozen mortgages (mostly in-house/portfolio loans with two credit unions) and my current bank only allows up to 10 loans or 1.2 million in loans. Since I hit that limit, I need to go to another bank but the other banks don't seem to want the exposure. 

I tried commercial lending but the terms I'm finding are terrible compared to residential rates, and some of them won't even chat because I'm too small. 

There's equity in the portfolio and it cash flows. It seems I'm too big for residential but too small for commercial. 

Can anyone with more than 20-30 mortgages share how they did it? 

@Cameron Tope Lima one did fixed 30 year permanent mortgages for us. One for about $200k and one for about 300k. Each had 3 properties in them to reach those loan amounts. The rate was about 7%. 

Now you may view that as high but it is actually cheap historically. To expect to build a large portfolio of single family homes at rates 5% and below is simply not realistic.  (I don't know what rates you are talking about but that is  my guess) It is the cost of doing business. You simply figure the higher rate in when buying the new properties.

The way people do it is using multiple banks, private lenders, blanket mortgages etc. Growing investors and constantly looking for more money sources. Be thankful the money is available. It wasn't that long ago, that it was extremely hard to find any mortgages for investors.  

@Ned Carey Yes, I guess I've been spoiled by my 3.5% interest rates over the past decade. 

Thank you!

@Ben Kniesly

From your initial post, I don't think you have enough equity in the portfolio to have a viable loan.  Most lenders right now want 65% loan to value max.

Best of luck

Stephanie

@Ned Carey . That’s what I’m trying to do. While freeing up some equity. Thx. 

@Stephanie P. My total loan is 1.2 , value is approximately 2.85 so I should have some space to borrow? I think

@Ben Kniesly

My mistake. I inverted your equity. Nice job.

@Cameron Tope
   @Ned Carey Yes, I guess I've been spoiled by my 3.5% interest rates over the past decade.

You look a lot younger than me. I remember my dad, who was a banker, telling me "You will never see as low as a 6% mortgage again". This was back in the 1980s. 

@Cameron Tope Just throwing it out there as an option (and knowing nothing about how you currently hold title to these properties, or where they are located, etc.) - have you ever considered selling your Residential portfolio and doing a 1031 exchange into a larger commercial property, or perhaps selling some of your properties as a package and buying more expensive centrally located residential investments?

@Ned Carey that’s exactly what I’m attempting to do I’m asking around for different financing options. Thx for input.

@Cameron Tope . I’m shopping around different ways to consolidate these loans. I’ve heard of something called a “interest rate swap”. Unfortunately the folks that suggested that product would not work with me because of  uncertainty related to Covid.

I’m still looking. I’ll keep you posted , I’m not gonna pull the trigger unless I can at least match my current principal and interest payment with the now loan. I’m surprised you were able to get 24 mortgages.

You did it with credit unions? Can you share more with me on that? Thx. Ben 

@J Cicero yes I read a book on 1031 exchanges contacted an intermediary (to facilitate the 1031 exchange) & several Commercial Broker’s regarding Multifamily. After doing some research and setting up a model I determined that cap rate are so compressed on Multifamily I will actually be losing cash flow even after leveraging my equity by three times.

Very surprising... if and when interest rates ever do go up I suspect there’s going to be a lot of trouble in Multifamily.

I have also considered some commercial options like car washes and laundry mat... seems like that requires more time to manage and also a learning curve ....I’m getting a little too old to risk it all ...would rather just stay the course of single-family.

my 10 rentals are in a very desirable area in South Tampa all centrally located within a mile of one another for self management efficiency. I expect some deals are gonna pop up after the federal stimulus wears off and I want to be ready ...trying to extract some equity out of my portfolio without refinancing each individual loan ,that’s way too expensive. I’ve got about 1.6 million in equity and I can’t find a way to get to it efficiently.

Seems like consolidating the loans and opening up a revolving line is my best option ,just looking for the best product. Thx. Ben

@Ben Kniesly , is doing cash out refi's on your existing properties with 30 year fixed rate mortgages an option?  Those 30 year fixed rate Fannie/ Freddie mortgages have the best rates you can find, and you have enough equity in those properties that you should be able to take plenty of cash out.  If you want to increase your leverage, that may be the cheapest way to do it.  Portfolio loans and lines of credit will likely have much higher rates.

@Ben Durwood . I’ve looked at that and you may be onto something the analysis isn’t quite straightforward..... commercial loans may be slightly higher but refund costs are orders of magnitude more expensive in terms of fees have to break even analysis. Good point though I’ll do it

@Ben Kniesly also the fatal flaw with refinances ..you start paying on the money before using it , revolving line allows money to be available until I can find a deal ...in this market it may take up to 24 months to find something that meets my criteria.

Somebody may suggest a simultaneous close to grab money and close on the next deal the problem is most deals worth buying ate cash only and you have to close fast , this is not an option if you need to refinance first

Originally posted by @Ben Kniesly :

@Cameron Tope. I’m shopping around different ways to consolidate these loans. I’ve heard of something called a “interest rate swap”. Unfortunately the folks that suggested that product would not work with me because of  uncertainty related to Covid.

I’m still looking. I’ll keep you posted , I’m not gonna pull the trigger unless I can at least match my current principal and interest payment with the now loan. I’m surprised you were able to get 24 mortgages.

You did it with credit unions? Can you share more with me on that? Thx. Ben 

Correct, I worked with two credit unions that did in-house (also called portfolio) loans that they did not sell to Fannie Mae/Freddie Mac. But the problem is they only loan allow one borrower to have a limited about of loan balances. So now I'm in the dilemma of finding another bank that will do in-house loans while I have the other 20+ mortgages. 

Originally posted by @J Cicero:

@Cameron Tope Just throwing it out there as an option (and knowing nothing about how you currently hold title to these properties, or where they are located, etc.) - have you ever considered selling your Residential portfolio and doing a 1031 exchange into a larger commercial property, or perhaps selling some of your properties as a package and buying more expensive centrally located residential investments?

J,

I have thought about it but I like the diversification and flexibility of having multiple properties. It's like owning a couple dozen stocks and if one doesn't perform I can sell it or trade it for another. 

Does that make sense?  

@Cameron Tope . Well you’re still a step ahead of me do you think your credit union will work with me I’m in Tampa Florida

@Cameron Tope I understand what you're saying, but two things to remember: 

1) At the level you're now at, this is the best way to grow your portfolio and the number of Units you own; and

2) Buying larger properties comes with scalability of costs. You may have 20 Units, but only one roof to maintain, etc. 

@Ben Kniesly you have 9 cups that are 30% full. Can you move the liquid around and have 4 cups that are 70-75% full instead, and 5 cups that are empty (paid off)? That gives you capacity for 6 more FM mortgages and you can talk to banks and credit unions about doing low LTV lines of credit secured by the 5 paid off properties. Last I dealt with them, Bank of West (BNP Paribas) was very happy to do 60% LTV ELOCs on investment properties.

Best thing is to call and talk to the small banks on their portfolio/blanket loans and look at the numbers if it makes sense. Most of those loans will have a 3,5, 7 or 10 yr ARM spread over 30 yrs so you will have to shop for a new loan every handful of years... there are pros and cons to both. I am currently learning as I closed on my 6 multifamily next week and my lender at the local bank said its time for me to start sitting down with the commercial side of the house but due to covid; they commercial side has been real conservative so hopefully they are opening back up more. I am on that same road with you so good luck and keep us updated on what happens.