Take Your Rental Investments to the Next Level With Portfolio Lending

Contributing Writer, B2R Finance | Real Estate Investment

By Kerry Curry, Contributing Writer, B2R Finance

If you’ve been investing for a while, you may be ready to take your investments to the next level with a portfolio loan.

Portfolio lending offers a number of advantages for residential rental property investors who may already own multiple properties and want to streamline their financing while expanding their reach.

“All of our loan products are for the purpose of helping to scale and grow your business,” says Tyler Crosby, assistant vice president, product development at B2R Finance.

B2R Finance’s new Portfolio Pro product, he says, appeals to experienced investors with an existing portfolio.

“Perhaps you have a sizable portfolio of 10-plus properties with a value of over $1 million and you are ready to take things to the next level,” he says. “Now is the time to think about portfolio lending.”

Investors ready to expand can benefit from portfolio lending in several ways:

  1. Portfolio lending allows an investor to streamline financing and operations by rolling multiple mortgages into one loan with a single monthly payment.
  2. While starter financing for newer investors often involves recourse loans, investors with more experience may be able to choose between recourse or non-recourse loan options.
  3. Asset-based portfolio lending primarily focuses on cash flow in determining lending limits and not an investor’s personal income. However, the loan is still subject to business and investor credit approval.
  4. In a typical lending environment, portfolio lending interest rates may be less than other types of lending products. Larger portfolios, due to efficiencies, may also achieve lower interest rates than smaller portfolios.
  5. Portfolio lending is done under a limited liability corporation (LLC), which allows an investor and/or a group of partners to mitigate personal risk while sharing the responsibilities of the corporation.
  6. Portfolio lending provides flexibilities. The properties can span multiple states, but it’s important to note that some regional lenders may have restrictions on the geographical spread and financing may not be available in all states. A portfolio loan may also allow an investor to refinance existing properties while buying new ones — all in one transaction.

Are you ready to grow your portfolio?

Kate Oliveira, assistant vice president, product development, at B2R Finance says it’s important for investors to make sure they are ready to expand before taking the leap. The investor’s time commitment — perhaps combined with third-party partners to assist in oversight — is very important as a rental property investment portfolio grows in size.

Here are some questions to consider:

  1. Do you have enough time and resources to grow your rental portfolio? “This is often a point in time that our borrowers are willing to commit largely full time to their investments,” Oliveira says.
  2. Are you comfortable with your debt-to-equity ratio? “The borrower should be comfortable with the equity contribution that they are making,” she says. “It’s important to maintain a healthy equity stake in your investments.”
  3. Do you, or your lender, have a strong knowledge base regarding investment expenses such as taxes, insurance and capital expenditures? Lenders can work with borrowers to help make sure they have a proper level of reserves.
  4. Are you calculating the value of your target acquisitions and existing portfolio from a sales comparison approach? “Investors often look at their portfolio from a purely commercial standpoint of taking net cash flow and dividing it by the cap rate and coming up with a value,” says James Muliawan, AVP, originations at B2R Finance. Lenders, however, will obtain a thorough appraisal based on comparative market values when determining how much they are willing to lend.

Conclusions

Investors desiring to acquire additional properties now have more financing options than ever before. Explore these options and ask plenty of questions to understand all the benefits and challenges that come with scaling your investment property portfolio.

 


B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit http://www.b2rfinance.com/apply-now and follow us on Twitter @B2RFinance. All loans are subject to investor and business credit approval, appraisal and geographic location of the property and other underwriting criteria. Loan amounts and rates may vary depending on loan type, LTV, verification of application information and other risk based factors. Portfolio Pro loans require a minimum of 10 units with a loan value of $1 million dollars. Application Fees, closing costs and other fees may apply.

The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.