Portfolio Blanket Loan and Re-fi Options

[Brandon Sturgill]

I currently have a portfolio loan dressed as a 1/1 ARM on two properties. The lender has provided 80%LTV on one property I have owned and one I am buying ($254k combined value). So, basically the first property acts as collateral for the loan on the second. And the rehab costs are integrated into the loan.

The first property will be re-financed from an FHA loan to make this happen. The loan is interest only during the construction phase of the rehab on the second house and then principal comes due. The first adjustment on the ARM comes at 6 months on a pretty standard rate increase schedule that can't exceed 2 points the first year and is capped at 6 points over prime for the life of the loan (or 9.5%). (this is a 30-yr. amortization).

I plan to sell the rehabbed property and pay off the portion of the loan assumed for that purpose...But I want to explore options of a buy and hold on the second property, which means I need a better long-term loan for the properties. Does anyone have any experience with this scenario or advice?