San Francisco, CA · Member since 2014 · 51 posts · 9 votes
I'm in the process of closing on my first rental property this month and have a goal of acquiring 9 more this year. Currently, I am getting 30 year fixed @ 4.75%. Once I have used up all 10 conventional loans, what would the best strategy be in order to keep going while preserving cash flow?
Investor · Houston, TX · Member since 2015 · 59 posts · 17 votes
11y
Well this is the first time I have done anything like this, but from what I am told I can combine all my loans into one loan called a blanket loan. It is structured on a 30 year amortization with a balloon in 10 years. I only have 4 properties that have loans on them so I will be putting these into the blanket. Some blanket loans list it as one loan, others list it as 4 loans (in my case where I have 4 properties under the blanket loan). Again, this is all new to me, so if anyone else has any info on blanket loans, please share!
Investor · Boise, ID · Member since 2011 · 1k+ posts · 736 votes
11y
Hi Brandon - A few options: Portfolio loans, seller financing, private money, JV partnerships. Best strategy depends on your personal situation. I am sure you are aware, but it will be challenging to get 10 bank loans in one year unless you have exceptionally high W-2 income. You won't be able to count rental income for a year or two...
Thanks for your response. I think I need to rephrase my question... Is there any way I can continue to get loans of 30 year fixed with an interest rate of 5% or less after #10? I know that portfolio lenders will do 15 year fixed or 5 or 7 year ARMs, but a 15 year fixed would make it very difficult to cash flow and ARMs seem like a risky idea one the original 5 or 7 year term is up.
Rental Property Investor · Vancouver, WA · Member since 2014 · 308 posts · 144 votes
11y
Hi Brandon,
Check around, as there's many commercial lenders that will loan for residential properties. I went that route, and because they are commercial, they don't care about reaching a set amount of rentals in your portfolio, only that the place you're getting will cashflow higher than their requirements.
Be warned though, almost every lender I have spoken with does only up to 20 years, not 30, so that might skew things for you a bit. Hope that helps!
Investor · Houston, TX · Member since 2015 · 59 posts · 17 votes
11y
I am working with a banker now that is offering me a blanket loan for my properties @ around 4%. I have talked to some credit unions that don't care how many properties you have, they can only hold 5 at a time, but these are local credit unions and they will only go 15 years. Good luck
San Francisco, CA · Member since 2014 · 51 posts · 9 votes
11y
@Account Closed
How does a blanket loan work? Can you take all 10 properties that you have conventional loans for and put them all into 1 "blanket loan"? And now you have 10 conventional loans free'd up again?
Investor · Houston, TX · Member since 2015 · 59 posts · 17 votes
11y
Well this is the first time I have done anything like this, but from what I am told I can combine all my loans into one loan called a blanket loan. It is structured on a 30 year amortization with a balloon in 10 years. I only have 4 properties that have loans on them so I will be putting these into the blanket. Some blanket loans list it as one loan, others list it as 4 loans (in my case where I have 4 properties under the blanket loan). Again, this is all new to me, so if anyone else has any info on blanket loans, please share!
How does a blanket loan work? Can you take all 10 properties that you have conventional loans for and put them all into 1 "blanket loan"? And now you have 10 conventional loans free'd up again?
Hi Brandon,
I believe they are at 4.5% at the moment. I'd have to double check, but that's the number that sticks in my head.
Investor · Houston, TX · Member since 2015 · 59 posts · 17 votes
11y
@Account Closed
I have only discussed this with the banker 3 times, but from what I understand I can take all the loans and put them under one loan (blanket loan). I am not sure how this would show up on your credit report, I have been told it will show up as one loan, and also that it could show up as 10 loans (if you have 10 properties under it) I only have 5 houses that I owe money on, so I would just put those 5 into a blanket loan, not really sure how many they would do or if there is a limit on the amount. My main reason is to get the lower interest rate. I am currently trying to pay everything off, and figure I could pay them off before the balloon note.
Investor · Houston, TX · Member since 2015 · 59 posts · 17 votes
11y
I ran into an issues trying to get financed and the banker wanted me to wait until after this years tax return, but I will update when I get more info.
I'm in the process of closing on my first rental property this month and have a goal of acquiring 9 more this year. Currently, I am getting 30 year fixed @ 4.75%. Once I have used up all 10 conventional loans, what would the best strategy be in order to keep going while preserving cash flow?
I have a lender that can up to 25 residential loans. 30-year fixed rate at 6-6.75%. No income verification. FICO of 620. Even if that rate, you will cash flow on most properties. You can also do portfolio loans, use your IRA, partner, or commercial loans on small multi units. There are lots of ways.
I have a lender that can up to 25 residential loans. 30-year fixed rate at 6-6.75%. No income verification. FICO of 620. Even if that rate, you will cash flow on most properties. You can also do portfolio loans, use your IRA, partner, or commercial loans on small multi units. There are lots of ways.
Hello @Aristotle Kumpis
I think everyone here could benefit from the specific lender you are speaking of. I am approaching my 8th conventional loan and just like Brandon I am trying to put in place a strategy for continuing to build my portfolio with financing after I reach 10. Would you mind giving a contact number, email or any information to who this lender is? Do they lend in Texas?
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
11y
I thought I'd answer this part of your question. The limit on the conventional underwriting is 10 financed properties, not loans. So if they're all under a blanket loan it doesn't matter that is still 10 financed properties, and you're not eligible for conventional loans anymore. Also any financed properties held in a single member LLC also count against your 10 financed property limit.