Credit Union Portfolio loan needs refinance every 5 years???

[David Kerner]

We have 9  single family rental properties which are financed through Fannie Mae. You can only have a Max 10 Fannie Mae loans...so we are looking into our banking options so that we can grow our portfolio further.

We just received a loan commitment from a local credit union for a portfolio loan with the following terms. But I'm not so sure this is a good idea for a long-term buy-and-hold rental loan

We are considering refinancing all of conventional loans into 1 portfolio loan, 80% LTV, 3.5% interest, 20 year amortization schedule. The one caveat is that we are required to refinance the loan every 5 years. This means that we will have to pay all of the closing costs each time we refi and run the risk of the interest rates rising higher than what we have now. Not to mention principle doesn't bet paid down much if you refi every 5 years.

I would love for my fellow long term, buy and hold investors to let me know what you think of this loan?? What am I missing?

Pros:

I can consolidate all of my conventional loans into one portfolio loan, extremely low interest rate, and in this process of borrowing $800,000....$500,000 goes to the refi and $300,000 is a cash out which I can use to buy more properties.

Cons:

I have to refi every 5 years which can cost $8,000-10,000 each time. Because i'm doing a refi every 5 years...i'm barely paying down any of my principle. I have to pay interest on the cash out even when I'm not using it?

Based on the above....what do think about this? Pros and Cons to consider would be helpful. Thanks in advance

[Frank Hinck]

Guys this was a wealth of knowledge, I read the whole thread and this is as good a thread as I’ve read on BP. We’re moving to Asheville in spring 2021 and I look forward to hopefully clinking pint glasses with this crew some day.