Small Multifamily Portfolio Loans

[Andrew Merritt]

I've accumulated 14 doors spread over 6 properties and I'm looking to consolidate finances and pull out some equity while interest rates are low.  Does anyone have a recommendation for someone to contact about a portfolio loan?  

Separately, would this even be recommended?  I plan on continuing to purchase and sell properties - how cumbersome/feasible is it to add/subtract properties from a portfolio loan like this?  I'm hoping to finance about $1M on a $1.3M portfolio if that matters.  

[Nick Belsky]

@Andrew Merritt

Not sure what kind of loans the other posters here have run into with blankets, but much of what is being said sounds like bad lenders to me. Blanket loans are great if you plan on holding the portfolio and not refinancing or selling for a while. I'm doing several $1-2MM blanket cash outs right now between 3.99-4.525% interest, 30 year fixed, fully amortized, no balloons. There are not updates on DSCR or checking in on reserves after closing, etc... these loans work just like a conventional for functioning purposes minus being reported on your personal credit and they normally come with a Pre-Payment Penalty (which is minimal with a pro lender).

You do save some money on blanket loans... but... not really that much.  Lenders will combine their underwriting fees and title will normally combine fees as well.  Sometimes lender will refund an appraisal or two back to you at closing if doing 4+ properties in a blanket... On the size of the loans I am doing right now, the borrowers might save $10-15k tops, maybe.

Some advantages is that if you have "under performing properties" you can roll them in with the whole lot and get a reasonable LTV for cash out. Sometimes if they are too poor, the lender may make you pull it from the group so it doesn't tank the whole deal. If you do find yourself needing to pull one out of the group after closing, you can normally recast the loan after removing the property for a minimal fee... like under $2000. The deeds will have be redone as well, but good lenders can recast in a week or two with minimal trouble. The deeds can get done in a matter of days in most states. Pulling a property out of a blanket or portfolio loan is no where near as cumbersome as it was 10+ years ago.

Depending on what your goals and timelines are, conventional will definitely get you better rates and lower closing costs, but not by that much. The best investment pricing I am seeing on conventional right now is 3.4-3.6% and they have been steadily rising over the past 6-8 weeks. That is SFR pricing. 2-4 adds at least 0.25% if not 0.50%.

If you aren't worried about fannie or freddie slots or your DTI for future fannie and freddie purchases, the conventional may be the best fit. If you want to get into a reasonable rate for a long term loan (as long as your cash flow is good, rate doesn't really matter anyway) and not have to worry about DTI or slots or credit reporting to your personal name, commercial may be the way to go. Only you can decide.

Cheers!