30 fixed / 30 am portfolio loans

14 Replies

Has anyone encountered any lenders who offer 30 Year Fixed/AM on portfolio loans?

Most I have talked to are 20-25 year AM with a balloon.

I found a 30 year fixed - but the fees are crazy and interest rates well over 6.8%.

@Anson Lau ...It depends on parameters and criteria of the loan itself.  Full disclaimer - I offer these loans, but it depends on the actual specifics of the scenario to determine the terms.  The fees don't have to be 'crazy,' which is subjective and the rates that high either.  It's just knowing the right lender for the right scenario.  But in general, I'd probably agree.  What do you have going on?  

It really depends on why you have to use a portfolio loan. Fees start at like a thousand bucks and go all the way up to the typical 3 points HML. Rates start right where Fannie stops, and also go all the way up to typical HML rates.

The portfolio loan for the person who had a foreclosure last month and has a FICO of 496 is going to be very different than what your scenario might be...

@Anson Lau the answer here is yes, but it would take a lot of calls to find it.  It is not common for sure.  We have a pretty active Texas forum here but have you visited with any real estate groups in your area?  You might find a solution from a local person. Just brainstorming here but maybe some of those suggestions might get you pointed in the right direction.

@Chris Mason @Andrew Postell understand.

I’m currently at my 10 cap for conventional loan, so I’d like to all move them into a portfolio loan and continue buying more rentals.

Fees are looking like 2% origination, $7+k in other fees, 6-8% interest. Seems like that’s what I’ve been seeing from different lenders (Visio, Corevest, Lima, Rentals of America, Corridor, etc).

@Anson Lau I would certainly recommend to NOT refinance any of your properties that you have currently.  At least, not unless there is some other benefit rather than freeing up the Fannie/Freddie thing.  What I mean is, it would be more cost effective to just go with the portfolio loans on each individual property at this point and keep your other loans put....again, unless there was some other benefit (cash out for example).  And the fees you mentioned in your most recent post are pretty standard for most portfolio lenders.  I will say that there are some that will have sub-7% interest on a 30 year rate...but we kind of guard those pretty hard.  With many of these lenders they have limited funds....so once everyone hears about their great loan....they lend it all out and then they don't have it any more.  So you may have to get to know someone directly for them to suggest the best lenders.  Hope this helps in some way.

@Anson Lau oh, so you are not at your 10 loan max?  Ok, so if you still have room, then analyzing 2 of your properties for a cash out loan would seem to be reasonable but I would strongly suggest NOT refinancing properties unless there is a benefit to you.  Just freeing up your Fannie/Freddie allotment is not going to be a benefit enough.  What I mean here is that if you refinance all of those properties will have closing costs.  Not to mention a blanket loan will not allow you to ever breakup your properties.  So if you ever wanted to sell one property...you couldn't.  Or maybe I should say...you could, but you would have to pay a fee and refinance all of the properties again.  The blanket loans are designed for something specific and just freeing up space isn't a good enough reason to do it.  If there was ANOTHER reason to do it, then that would be worth examining.  I'll try to say it in another way:

Scenario 1 - refinance all properties to free up Fannie/Freddie

Step 1 - Refinancing all properties into portfolio loan - Pay closing costs to do so

Step 2 - Get new Fannie/Freddie loan on next purchase - pay closing costs when you purchase

Scenario 2 - leave current Fannie/Freddie loans alone

Step 1 - well, no need to do anything - therefore NO COST

Step 2 - Get portfolio loan - pay closing costs when you purchase

So you already HAVE Fannie/Freddie loans.  To get out of what you have only to get them again means you have to pay closing costs TWICE.  There is no need to do it.  

I am being very demonstrative here because there will be lenders who would LOVE to make that money on having you do Scenario 1.  There's not benefit to you but there's a HUGE benefit to them. So please be careful out there.  I hope all of this makes sense but feel free to call me if it's easier for you to do so.

@Andrew Postell I understand. These properties are all long-term holds for me, long term as in 5-7 years. One of main issues I’m running into with most conventional lenders, is it’s getting difficult to get more loans since I’m at 8 right now. It takes more paperwork and 1.5x longer, even with my 800+ credit score and decent tax returns.

Are you suggesting I just keep my current 8 conventional loans but refi my other 3 properties which are free and clear under a portfolio loan instead under an LLC?

@Anson Lau , you are confused.  Refinancing pairs debt called a mortgage with a property.  You can do one mortgage on one property, in the traditional lending environment.  Or, you can get one mortgage over several properties.  This will be in the portfolio environment.

Your next point, about an LLC refers to ownership. You can own a property in your own name. You can own a property as a business entity, such as an LLC.

You can continue to own free and clear properties with an LLC, with no debt on the properties.

IF you want to get debt associated with properties that are owned by an LLC, you most likely will have to get a portfolio lender to make the loan.

@Anson Lau Hmm, well, I don't know how to comment on it getting harder...it should be getting easier. If you are working with the same lender each time they can use a majority of the same documentation on each loan. And your DTI should be getting BETTER with each property too so you should qualify better as well. If you are switching to a different lender each time, I'm sure it get's annoying having to submit everything again and again. But the main crux here that I want to drive home is that if you have room for 2 more Fannie/Freddie style loans then it should be worth analyzing 2 of your 3 properties you own free and clear. If you don't want to go Fannie/Freddie on any other loans, then stay put on the loans you have, and analyze the numbers with portfolio loans on your free and clear properties. That is my recommendation.

@Kerry Baird sorry, maybe I wasn’t explaining my situation well enough.

I’ve been BRRRRing all my SF rentals. As of now, I have 8 SFs under conventional Fannie/Freddie loans. There’s a 10 max on these Fannie/Freddie products, which is why I’ve been holding out on my 3 other SF properties which are free and clear and I want to do a cash out/refi on them.

The original plan was to move all 8 SFs + the 3 free and clear SFs under a portfolio loan and deed them over to an LLC, instead of my personal name. So that's 11 properties under one large loan.

So I could hit the “reset” button on the Fannie/Freddie products and continue BRRRRing.

But like @Andrew Postell said, I may just keep the current 8 loans I have and just start using commercial/portfolio loans from here on out.

Instead of paying a ton of closing costs for no apparent reason, other than deeding the properties to an LLC for asset protection purposes.