12 May

A portfolio lender is a key to many investors strategies, because they often lend on multiple investment properties.  A portfolio lender will often have less strict lending requirements than large national banks, which makes it easier for investors to get loans. I have a great portfolio lender, who allows me to finance as many properties as I want as long as I continue to qualify and have enough reserves. Having a good portfolio lender is extremely important to my strategy, which depends on buying many properties. I would have a very hard time reaching my goal of purchasing 100 rental properties. if I did not have a portfolio lender financing my properties.

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A portfolio lender lends their own money and does not sell their loans to institutional investors. Because portfolio lenders do not have to conform to Fannie Mae guidelines they will lend on more than four and even more than ten mortgages. They also may allow a cash out refinance and be flexible with many other financing options. My portfolio lender also does not need a property to be in livable condition for me to get a loan .

What type of loans does a portfolio lender offer?

Since a portfolio lender is a local bank that loans their own money, they do not have to meet Fannie Mae lending guidelines when lending. That allows the portfolio lender more flexibility, but they also do not offer all the loan programs large banks offer. My portfolio lender does not offer a 30 year fixed mortgage. My portfolio lender only offers a 15 year fixed, 5/30 or 7/30 ARM. To get the lowest interest rate, I use a 5/30 ARM on most of my rental properties. Here is a great article with more information on ARMs. Each portfolio lender will have different terms and loan programs.  I can put 20% down on as many properties as I can qualify for with my portfolio lender .

A portfolio lender will also want you to have all your accounts and money in their bank. This is usually not a big issue for most people since a portfolio lender will have very competitive programs and products as the larger national banks. The better relationship you build with a portfolio lender, the better loans you will get.

How I found a portfolio lender

I found my portfolio lender, because I am a real estate agent  and I heard my portfolio lender was the best bank for investors from other agents. After I ran into problems with my mortgage broker financing my fifth rental property, I called up a portfolio lender to see what they could offer. The portfolio lender had the perfect loans for my investment properties and it took me about a week to move all of my accounts over to the new bank so I could easily finance new rentals.

For more information on financing rental properties please check out my new eBook: How to Get Financing on Multiple Investment Properties, which is available as a 99 page Amazon eBook here or as a PDF here for only $6.99!

How can you find a portfolio lender?

The first way to find a portfolio lender is to ask everyone you know if they know of a portfolio lender. Some people may not know what a portfolio lender is; ask them if they know a lender that likes to loan to investors. Who can you ask?

• Real Estate agents  know many lenders and may be your best source to find a portfolio lender.
• Other lenders may be able to refer you to a portfolio lender once they know they cant do a loan for you.
• Investors in the area will know portfolio lenders, the trick is meeting them. Real estate investor meetings area great place to meet investors and get local information.
• Ask your local bank if they are a portfolio lender or what types of investor lending programs they offer.
• Ask title companies who local investors use to finance their rental properties.
• Call your city of commerce department up and ask if they know who the most investor friendly banks are in town.

Search the internet for a portfolio lender

Searching the internet is the easiest way to start your search for a portfolio lender. Simply search for a portfolio lender in your state on any web search engine. I have tried this a couple of times for people in different states and I always get results. Once you find a bank that mentions portfolio lending in your state, call them up and ask what type of investor programs they offer.

Internet forums can point you towards a portfolio lender

Bigger Pockets is a great web site with a great investor forum. They have a ton of information and many people will list or mention who they use for a portfolio lender in a certain state. You can search the forum for portfolio lenders in your state or ask a question in the forum.

Cold calling for a portfolio lender

If none of the options above are working and you cant find a portfolio lender, you may have to resort to calling local banks in your area. Call banks that are not national chains and see what type of investor loans they offer. If they dont have what you are looking for, ask them if they know which bank might. Keep trying until you have called all the local banks you can find.

What questions should you ask when calling a bank?

Many banks do not advertise they are portfolio lenders and many people working at the bank may not even know what a portfolio lender is. If you are calling up a bank and they say they arent a portfolio lender, dont give up! Ask to talk to a loan officer and ask specific questions about what type of investor programs they offer. Here are some good questions to ask;

• Do you loan to investors who already have four mortgages?
• Do you have a commercial loan department?
• Do you sell your loans or keep them in-house?
• Do you allow investors with four or more mortgages to do a cash out refinance ?
• What terms and loan programs do you offer investors? ARM, 15, 30 year fixed, balloon
• What interest rates are you charging and what are the initial costs for your loans?
• What loan to value ratios to you offer investors for new purchases and a refinance?

Finding a portfolio lender is not easy, but it makes investing a lot easier. My portfolio lender has been awesome financing my rental properties and fix and flips. This should point you in the right direction for finding a portfolio lender in your area If you have any questions or suggestions please leave a comment and let me know.

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