Having Trouble Finding A 30 Year Portfolio Lender

[William Eric Schaefer]

This problem only applies to the Refinance portion of the BRRRR process. I am having trouble finding a lender who will finance a 30 year loan on a SFR rental property. However I have talked with a lot of small banks and a few offered a 5 year ARM with a 20 amortization. The 5 year ARM would work with the properties I am looking at but that obviously decreases cash flow. My biggest concern is giving up the extra cash flow I would get on a 30 year amortization opposed to the 20 year.

Is this because of Covid?

My ideal lender would offer a 5 year ARM with a 30 year Amortization is that too much to ask for😂??

Also I am aware that I can put properties in my personal name and qualify for a conventional 30 year mortgage but I currently do not have the income to acquire more than one mortgage.

I am located in the Birmingham area any referrals would be greatly appreciated!

[Steve Vaughan]

Originally posted by @William Eric Schaefer:

@Jason Wray

Thanks for your response but I have called 49 banks in the Birmingham area and they all give me the same answer: "We can do a 5 year ARM with a 20 year amortization".

49 banks?  Whoa.  Bet that was a hoot.

5/5/20 terms are standard commercial fare.  A lot of people corner themselves into commercial bondage by over-sophisticating a house or being too impatient to allow seasoning. 

Dont forget that you also get to report your financials to them every year and the loans are callable (at the mercy of some committee) every 5 years, not just adjustable.

That said, I've had plenty of commercial loans on commercial property.  When they force you to pay them off in 20 vs 30 yrs, you won't wish you still had 10 more years of payments when it's paid off.