Not maxing out on 10 loans

[Ryan Keenan]

Hi BP people, I hear many people say to get your 10 conventional loans first then switch over to commercial / portfolio. Seems this way is very slow in reguards to scaling and sitting on the sidelines every 6 months waiting to refinace. I know about delayed finance but it doesnt recoup any of the rehab costs.

My question is how many investors dont actually go all the way to ten and make the jump to portfolio/ commercial way sooner? If so are you still buying 1-4 units or larger? Seems like less restrictions and easier to scale on the portfolio loan side. Appreciate any thoughts.

[Cassi Justiz]

I would say the majority of investors don't utilize their 10 conventional loans unless they are doing turn-key style properties and plan to leave 20% in each deal. The majority of the investors that I know who plan to recoup any of their rehab costs end up switching over to commercial after a couple of deals. 

The downside with commercial is that most of the commercial lenders only do 15-20 year notes. However, I'm starting to see commercial lenders doing fixed interest rates loans and longer terms. They also don't have strict seasoning requirements, which is a great perk. So there's definitely a big up-side to the commercial lending if you don't want to leave as much money in the deal.