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A portfolio loan is basically a bank that holds its mortgages and does not sell them on the secondary markets once the loans are made. They are also called balance sheet loans. Typically, banks that sell their mortgages on the secondary market have restrictions. The big one is the borrower can own only so many rental properties. A regional or local bank that does not sell their loans can typically help an investor more than banks that sell their loans. However, even the local banks may have their own lending limits. The best thing to do is to establish relationships with as many balance sheet banks/portfolio lenders as possible.
I would not consider a home equity loan/line of credit a portfolio loan per se. The concept is similar but the line or equity is tied to your home's value and the investor's income, not the performance of the investment property or its value. However, for the beginning investor to buy their first property, a home equity loan or line of credit might be a great tool to help them buy their first home. However, the investor must be disciplined in that the money borrowed must typically paid back sooner. The suggestion would be to take out the line. Buy your first property and hopefully within 18 months to two years, you can refinance the investment property and pay the line back. Then you can use those proceeds to buy the next property. A disciplined investor who can hold real estate over the long haul can make more money over the long haul than those who only buy and flip.
I don't know if there is a typical investor for a portfolio loan. If your ambitious and want to grow a big portfolio, then at some point you will become a portfolio borrower. However, if you want own just a few properties or you buy and flip properties for short term profits, then you might not need a portfolio.
Ernie Rafailides
I would not consider a home equity loan/line of credit a portfolio loan per se. The concept is similar but the line or equity is tied to your home's value and the investor's income, not the performance of the investment property or its value. However, for the beginning investor to buy their first property, a home equity loan or line of credit might be a great tool to help them buy their first home. However, the investor must be disciplined in that the money borrowed must typically paid back sooner. The suggestion would be to take out the line. Buy your first property and hopefully within 18 months to two years, you can refinance the investment property and pay the line back. Then you can use those proceeds to buy the next property. A disciplined investor who can hold real estate over the long haul can make more money over the long haul than those who only buy and flip.
I don't know if there is a typical investor for a portfolio loan. If your ambitious and want to grow a big portfolio, then at some point you will become a portfolio borrower. However, if you want own just a few properties or you buy and flip properties for short term profits, then you might not need a portfolio.
Ernie Rafailides
