Portfolio Blanket Loan and Re-fi Options

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I currently have a portfolio loan dressed as a 1/1 ARM on two properties. The lender has provided 80%LTV on one property I have owned and one I am buying ($254k combined value). So, basically the first property acts as collateral for the loan on the second. And the rehab costs are integrated into the loan.

The first property will be re-financed from an FHA loan to make this happen. The loan is interest only during the construction phase of the rehab on the second house and then principal comes due. The first adjustment on the ARM comes at 6 months on a pretty standard rate increase schedule that can't exceed 2 points the first year and is capped at 6 points over prime for the life of the loan (or 9.5%). (this is a 30-yr. amortization).

I plan to sell the rehabbed property and pay off the portion of the loan assumed for that purpose...But I want to explore options of a buy and hold on the second property, which means I need a better long-term loan for the properties. Does anyone have any experience with this scenario or advice?

You basically just need a longer-term loan on the single remaining investment property, right? The longest-term option is just getting a re-fi at 75% LTV for the investment property on a conventional, conforming, non-owner-occupied loan (as long as you don't have too many loans already). With this, you can get 30yr fixed-rate financing, below 5% right now if you're well-qualified.

Other lenders are doing 70-75% LTV on portfolio loans for 10-25yr maturities, with variable rates. Others are doing HELOC's w/ 10yr interest-only draw period, then term-out for 25 years. Ask around. Agents, investors, banks, etc..

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