In the classroom today, Stephen Bighaus shares his insight on how portfolio lending is opening up with more options.
Listen in as Stephen Bighaus clarifies different ways to bundle properties together into a single loan.
Mike: 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 with Security National Mortgage, host of the REI Classroom. I’ll be talking about moving past 10 financed properties.
Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.
Steve: I get a lot of customers and that, that ask me once they get up to their Fannie Mae limit of 10 financed properties, how can they move forward. And it’s a valid question. What I’m finding is in the portfolio lending world it’s starting to open up a little bit. I’m seeing that the minimum loan amounts are going down. So if you want to buy maybe one or two houses you’re able to do that.
I’m also seeing the opportunity where people can bundle properties into one loan, and that’s pretty big. Just to give you some examples in that, we have clients that have gotten up to their 10 financed properties and they want to buy more. So what they’ll do is on the bundle product, they can actually take their investment properties, bundle them into one loan. I really recommend that they do it in the name of an S-Corp, because when they do that, they’ll move not only the financing, but the title into the S-Corp. Well, with both Fannie Mae and Freddie Mac, when you move into an S-Corp they don’t count those in your mix as far as 10 financed properties, because they’re holding that totally separate entity. And so, that’s really big, because then what they can do is they can come back, and they can start the process over again.
Now some people tell me that doesn’t work, I can tell you right now it does. I’ve got several clients that have, well, one client has got 44 financed properties. We’ve done it three, four times with these folks, so it does work. So really important to know as far as being able to do that.
Now, one of the common things that I hear is people talk about as far as moving them into the LLC, and having the same effect, that does not work. Both Fannie and Freddie look at any properties within the LLC as an obligated debt, and they will count those against you. So that’s somewhat of a misconception, a misinformation out there.
The approach I’m really excited about the way the portfolio lending started to open up, great opportunities for people to move on. One of the biggest things that a customer has to think about when you’re doing this is that, now all of a sudden they’re no longer a residential client, they’re a commercial client. Rates are going to be a little bit different, terms are going to be a little bit different, and fees are going to be a little bit different. So you’re probably not going to get the same type of financing you would with Fannie and Freddie, but it’s really important that you change your mindset when you’re taking that plunge, because it is a little bit difficult.
Again, Steve Bighaus, Security National Mortgage. It’s been a pleasure to talk with everybody in the REI Classroom. Have a good day. Thank you.
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