It is the goal of every successful residential real estate investor to secure proper financing for their properties. Most investors secure one loan encumbering each property. The servicing of multiple loans with differing lenders, terms and payment schedules can become overly complex, time consuming, and expensive as the portfolio grows. PB Financial Group, a hard money lender in Los Angeles, would like to offer these investors one consolidated loan across their portfolio.
This article is directed to the Buy-and-hold investor with a portfolio of stabilized properties to consider a portfolio loan.
A Portfolio Loan
The structure of a portfolio loan will accommodate residential real estate investors to buy or refinance multiple properties under a single loan. One monthly payment will service the debt encumbering multiple properties.
Portfolio loans can offer the investor flexibility in terms, rates, and leverage. Although flexible, the common features of portfolio loans are:
- a higher loan-to-value ratio,
- the structure for investment properties,
- a longer term than acquisition and rehab loans encumbering a single property, and
- terms measured by the portfolio’s performance and stability.
One loan across an investment portfolio will enable an investor to streamline the debt service obligation and increase cash flow. This increase in cash flow will have a positive impact on the investor’s cash-on-cash return.
The Best Position for a Portfolio Loan
Investors will be in the best position to consider a portfolio loan when one loan can encumber at least five rental properties with a consolidated positive cash flow. These economies of scale will result in a lower overall monthly loan payment.
The favorable loan terms will benefit all the properties as there may be one with an unfavorable structure that overburdens the performance.
Favorable loan terms will also increase the equity position to be leveraged for capital improvements or used for equity to purchase additional properties.
Underwriting Factors
PB Financial Group, like other reputable private lenders in Los Angeles, will underwrite potential investments to a property’s value and performance to collateralize the loan. The investor’s experience and credit score will be evaluated to determine the interest rate and used as a measurement of risk.
The investor’s credit score and cash position are secondary to the value of the portfolio.
A rental portfolio loan with a favorable rate, flexible terms, and a transparent underwriting process will position an investor to establish a profitable portfolio under a single loan.
If you are a residential real estate investor and would like to discuss the benefits of a portfolio loan, it is in your best interest to work with a highly reputable and experienced hard money lender in the Los Angeles. PB Financial Group is a premier, direct hard money and bridge lender that has provided quick funding since 2007 and closed over 2,700 loans. We aim to satisfy your financing needs efficiently.
For further information or to schedule a consultation please contact PB Financial Group at 877-700-3707 or visit www.CalHardMoney.com to learn more.
