Portfolio Lending

Announcer: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Steve: This is Steve Bighaus, Security National Mortgage and host of the REI Classroom this morning.
One of the common questions I get with investors is what do I do once I get to my ten finance properties with Fannie Mae or maybe my six with Freddie Mac? Where do I go to from here?
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Steve: Over the last few years, there have been some companies that are popping up and offer the portfolio lending. But the feedback that I’m hearing from a lot of my customers that tried it is one, it is expensive, one, that they never get closed, I mean, it’s just really, really tough right now. I think the portfolio lenders right now are still trying to get their feet planted a little bit more solid because they’re just not sure where it’s going to go.
One of the things that I’ve done in that is I’ve shied away from the individual portfolio lending until the market problem matures a little bit more and we see some of the people that can really step up to the plate and offer some pretty good financing. Some of the issues that I see in the portfolio lending are requirements on a property as far as square footage, bedroom and bathroom counts, as far as neighborhoods. The get very selective about the neighborhoods, and you’ve just got to be really, really careful in that area.
Like I said earlier, one of the things that I try to do is trying to shy away from that as far as the individual because, like I said, they can be pretty expensive. One of the things that I’ve done in that is I work a little bit more with a couple of commercial lenders. They can offer the bundling in that, which I think is a really viable product. Rates are probably a little bit better. The fees are definitely a lot better. It’s just another vehicle for people to increase their portfolio size.
What I tell my customers, I say, “Once you get to that limit of 10 financed properties, you’re really no longer a residential customer. You’re really a commercial customer.” That’s the mindset that you really have to think. So if you want to grow, the commercial side is a good avenue. I’ve got clients right now that own up to 40-plus properties.
I don’t have much more to say on the subject, and that I just think that there are opportunities once you get past your 10. I’m more than happy to help you. Thank you.
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