What to do after 10 conventional loans?

[Account Closed]

Hi,

I'm trying to get a handle on what my options are once I reach 10 financed properties. At that point it's into the commercial lending business; is every loan there on out 30% down, 5 yr adjusting rate? There must be other options, of which I don't know - any insight to the lending environment after 10 loans would be really helpful, thanks!

To tie into that, I hear the term "portfolio" loan as if its a cure-all loan type.

Thanks

Jon

[Michael Hayworth]

"Portfolio" loans are just loans kept by a bank, rather than sold on the secondary market. Usually, it'll be from a small, local bank or chain of banks.

30% seems high. I have one bank that will do them at 20%, the other at 25%. One big advantage is that they will wrap in construction costs. So if I buy a $100K property that needs $40K worth of work, they'll finance 75% of the total cost, rather than just purchase price.

The ones I've worked with do 15-20 year amortization with a 5-year rate adjustment, but amount of adjustment is capped, so it's not gonna go from 5% to 10% when you hit the 5 year gap.

I rarely keep a property more than 5 years anyway. With appreciation in the market, I'll take my gains after a few years and turn that 1 property into 2, so the rate adjustment hasn't really been an issue. If you're all about LT buy & hold, that may be a different story.