Can the bank call a 30 year loan due at any time for any reason!?

[Jonathan Taylor Smith]

I was speaking to another Real Estate Investor who lost money on several rental properties in the 2009 economic downturn. I was curious to learn from him how he lost properties (or was forced to sell for a loss) if they were rented for more than the monthly PITI + HOA. I assumed that he was going to tell me some horror story about his tenant losing their job, property damage, evictions, etc… However, he stated that he had no problem with any of that.

He said that his bank called all his loans due because they were short on cash themselves from the downturn. I asked how the bank can call a loan due if they were paid current and no other provisions had been broken (i.e. "Due On Sale" Clause); which is when he mentioned that loans for investment properties do not have the same protections as those for a primary residence – and therefore the bank can call the loan(s) due whenever they wish... IS THIS TRUE?

So I can have a 30 year fixed rate loan on an investment property and the bank can call that loan due immediately on a whim!?! If so, then I must slow down and completely change my strategy to avoid the need for bank loans if that rug can be yanked out from under me at any time. I heard a passing reference to something similar to this in a BP podcast, so it is my second time hearing of this possibility in one week. How can the BRRRR strategy work safely if this is an ever present risk?

Thanks,

J.T.

[Wayne Brooks]

LOC's, yes. Conventional loans, no. Your buddy is just telling you crap, to hide his screw ups, trying to save face.