Nick Worthing, Author at America Mortgages

What is AM Portfolio+?

The America Mortgages’ Portfolio+ program is a streamlined debt service coverage mortgage loan over multiple residential investment properties. It is one loan with blanket collateral over a minimum of 2 properties and up to 100+. Similar to our AMIRM program announced last week, AM Portfolio+ does not require any personal income documents from the borrower; the underwriting is solely based on the appraised value of the properties and the cash flow generated from the lease agreements.

Residential real estate has had an incredible run in both price appreciation and rent appreciation in recent history. We have heard from several clients over the last few months how great their rental portfolio in the U.S. has done in both areas. Though this is very true, there is one point that always stands out – where has your ROE gone?

Return on Equity (ROE) is a common measurement used by real estate investors to determine how strong of an investment their properties are. With the strong price appreciation over the last several years, our clients have seen massive growth in their portfolio values. Though rental rates have increased, they aren’t keeping up with the price appreciations, leading to investors having much more equity trapped in their portfolios and a reduced ROE. In the past, the solution for this was always to sell the properties and buy bigger/better cash-flowing properties – this is where AM Portfolio+ comes in.

Investors can use AM Portfolio+ to release that trapped equity and redeploy it into other real estate or investment projects. This new increased leverage on the portfolio has allowed investors to bring their equity position back in line to support a more robust ROE and provide them the cash to deploy into other properties or projects.

Key Highlights for AM Portfolio+

• One loan over a portfolio of residential homes

• No personal income documentation required

• Terms ranging from 5 – 30 years

• Rates starting in the high 3s

• Streamlined underwriting approach

• Refinance/Purchase/Cash out

With rates at an all-time low and AM Portfolio+ available across the U.S., there is no longer a need to sell properties that aren’t providing the ROE they once were.

Release the equity with our streamlined underwriting approach and redeploy that cash into other areas. Call us today to discuss your scenarios.

Portfolio Loans

Real estate investors looking to scale quickly and expand their residential investment portfolio often run into the same problem fairly quickly – too many financed homes. Most conventional lenders in the U.S. will allow borrowers up to 5 or 10 financed properties either with that lender or financed in general. After that, the available financing is limited or non-existent conventionally. This limits the investors’ ability to scale and grow their real estate portfolio without having more equity. Usually, releasing more equity is either not available or too expensive to make the numbers work. This is exactly where portfolio loans come into play.

What are the basics of portfolio loans?

Portfolio loans cross-collateralize several different properties and can be used to either purchase, refinance, or release equity from a portfolio of stabilized investment properties. Most portfolio lenders have a minimum of 5 properties and a USD $500,000 loan minimum – there is no maximum number of properties or loan amount. This, in turn, helps the investor avoid the 5 to 10 financed properties limitation that conventional lenders have and will instead consolidate them into one loan.

Here are 5 reasons how a portfolio loan is able to help an investor solve the issue of having too many financed homes, and grant them the ability to scale on their own terms and pace.

Top 5 Benefits of a Portfolio Loan:

– No capital or property financing restrictions
– Portfolio specific underwriting – no personal income underwriting
– Non-recourse and interest-only options available
– Flexibility and competitive structures with higher leverage and longer amortizations
– Ease of managing one loan versus many individual loans

With the underwriting criteria in the investment property market continuing to tighten among traditional lenders, the portfolio option provides a streamlined underwriting approach that focuses mainly on the cash flow of the specific properties.

Portfolio Loan Interest Rates

More often than not, the loans are offered non-recourse, allowing the investor to keep a separation between personal and business assets, with no requirements to document the borrowers’ personal income. For investors focused on monthly cash flow, interest-only options are available.

With the recent news of Fannie Mae‘s reduction in interest in the investment real estate market and the resulting interest rate increase on investment property loans, the portfolio loan terms are usually more competitive from a leverage and pricing standpoint as a conventional investment property loan, with much more streamlined underwriting and less documentation required.

We believe portfolio loans will continue to be a top financing option for clients looking for increased leverage, competitive pricing, and flexibility when looking at options for their real estate portfolio. Our team is available to review the specific scenario and terms best suited for you. Find out all about your mortgage options when you schedule a 15-minute call with our U.S. Mortgage Specialist here: [email protected].