RESIDENTIAL PORTFOLIO LOAN
RESIDENTIAL PORTFOLIO
Multiple Rental Homes Under One Simple Portfolio Loan
Introduction
Our Residential Portfolio Loan program provides real estate investors with an outstanding long-term financing option on stabilized properties who want to combine all or a specific amount of their properties under one loan.
Residential Rental properties have always been a staple for any real estate investor. However, never been as popular or easy as it has become in the last decade. Our underwriting guidelines for our real estate investors are very easy, with the least amount of paperwork needed for approval.
We don’t require tax returns or any yearly financials from our borrowing investors. However, we care more about the property’s cash flow or potential cash flow. Otherwise known as Debt Service Coverage Ratio (DSCR)
While Residential properties become less available in more urban or metro areas forcing developers to build further out, residential properties for rent will always be a desirable asset class for real estate investors and builds a strong portfolio and balance sheet likewise.
Program Overview
Variable and fixed-term options are obtainable for the Residential Portfolio Loan programs. While certain programs may be restricted geographically, the majority are available in larger Metropolitan Statistical Areas nationwide.
The Residential Portfolio Loan program issues loans reaching generally up to $4,000,000 per property to investors for both the purchase and refinancing of their investment properties. Fort Knox Capital offers DSCR loans for any 1 – 4-unit residential rental property with interest rates starting at 7.00% and terms up to 30 years fixed, 3/1 ARM, and 5/1 ARM options.
Quote Requirements
Several variables will influence a quote for a Residential Portfolio Loan. Therefore, providing relevant details is important. This helps avoid incorrect quotes and assumptions. Here are the basic details we ask for you to share with us to effectively deliver a soft quote:
Due Diligence
If an investor wishes to go ahead with the quote that has been provided, a letter of intent will then be issued along with an appraisal fee to order the appraisal.
Factors like the size, condition, comparable difficulties, and location of the investment property influence the cost of the appraisal fee. Appraisal fees for any 1–4-unit property with rental reports can range from $500 – $1,800 per property. We will also proceed to order the Title before or after the appraisal is complete, depending on your situation and the location of the property.
Item Review:
We request several documents for internal review while waiting for the Appraisal and Title reports during our Due Diligence. Having these documents present and readily available with your assistance helps simplify the entire underwriting process.
Guarantor(s)
- Completed Application
- Two months of bank / financial statements (all pages)
- Personal Financial Statement
- Real Estate Owned or REO schedule
- Credit Authorization
- ID
Borrowing Entity
- Articles of Incorporation
- Operating Agreement
- Organization Chart (if any)
- Federal EIN letter
Property
- Purchase and Sale Agreement (if purchase)
- For Refinances we will review one or both:
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- (a) Trailing 12 months of Rental history from the rental site
- (b) Trailing 12 months of bank statements
- For Purchases, we will review one or both..
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- (a) the appraisal with short-term rental stats
- (b) or seller’s provided rental history if available
- Insurance policy and contact info.
- Tax Statement
- HOA contact info or questionnaire (if any)
- Evidence showing local city allows short-term rental
- Property management agreements (if any)
- Property management resume (if any)
- Current mortgage statement or payoff (if refi)
Residential Portfolio Loan Types
Single-Family Rentals
A single-family rental is a standalone residential property that is designed to be used as a single-residence unit for two or more individuals. Single-family rentals consist of general space and facilities for use by the occupants of the unit.
SFR properties are now the fastest-growing segment of the housing market, and when it comes to alternative investments, single-family rentals are hard to beat. These rental properties have constantly yielded remarkable amounts of profit to investors. Many real estate investors are now moving their assets to the Single-family rental market because of its excellent returns through appreciation and rental income.
Townhomes
Townhomes, also known as row houses, are quite similar but different from single-family rentals. These properties are built as single-residence units, but unlike SFRs, they share a wall or two with the neighboring townhomes. This means that occupants may have neighbors on either side of their buildings but not below or above them.
Townhomes make good real estate investments, and investors keep turning to townhome vacation rentals for plenty of good reasons. These properties are cheaper than many single-family rentals because they are inexpensive to build and low in demand. Townhomes also require a low level of maintenance allowing real estate investors to enjoy passive income from townhome vacation rentals.
2-4 Unit Properties
2–4-unit properties, sometimes referred to as duplexes, triplexes, and four-plex’s. In a 2–4-unit property, the units are separated, having rooms, bathrooms, kitchens, and utility meters. This means that each unit should have the same amenities as a legal single-family rental.
2–4-unit properties are relatively cheaper to purchase than multiple or large properties. Real estate investors can also enjoy several benefits, such as being able to spread out the vacancy risks and maintenance expenses across two to four units instead of having just a single unit.
Condos
A condo is one of the different individually owned units in a residential building complex. Condos remain in high demand among real estate investors because these properties remain comparably affordable amidst inflating home prices and increasing mortgage rates.
Real estate investors can make smart investments by investing in condos for rental as they tend to generate more income. Condos are generally cheaper to purchase than traditional homes. In addition to being cheaper, condos require lower-level of maintenance and provide added amenities for the tenant.
FAQ
Is there a Pre-pay Penalty to pay off the loan early?
You have the option to select a prepayment penalty option or not with your loan. However, the best pricing loans are with prepayment penalty options. Our “Investor Loans” that cut through all the red tape are not securitized or backed by the government that offers a conventional loan where you would need to qualify for a full underwrite and verify a full financial review to qualify.
Due to that, our Residential Portfolio Loans require a level of commitment or return on investment to fund, originate and service the loan.
Why is your Residential Portfolio Loan or Portfolio DSCR loan a good loan for real estate investors?
- We offer a no-red-tape solution for real estate investors that are seeking to build a large and fast portfolio that you would not be able to through conventional means.
- We require No Tax Returns or Proof of Personal Income from the guarantor.
- We underwrite solely on Property Cashflow.
- We don’t limit how many loans you have or apply for at any given period.
- We allow LLCs, Trusts, and other corporations to be the borrower.
- The loan will not be on your personal credit report If the borrower on the loan is an LLC, Trust, or corporation.
Can I Lock my Rate and When?
No, we do not offer rate locks on Residential Portfolio Loans due to the volatility of the market, which can go up and down throughout the underwriting process. Your loan rate will be secure once we draw loan documents for the escrow agent at closing.
Do I need to purchase Flood Insurance?
If your property has been identified to be located in a Flood Zone by FEMA, then the answer is yes. You may ask your insurance agent or company and determine if the property is located in a flood zone.
Do you need to order a credit report from all members of an LLC?
We require a credit report to be ordered with any member of an LLC, Trust, or corporation that owns 20% or more of any entity and to be a guarantor of the loan. If all members own less than 20% ownership, then the membership will need to designate a guarantor for the entity or the loan.
Do you allow Series LLC or DST for your loans?
Yes, it is possible; however not normal because it generally does not offer a personal guarantor. We would have to do a full review of the entity structure, and the volume of the funding needs and agree to leverage (Low LTV) that works for us.
What happens if I want to pay off, refinance or sell one of the properties within the Residential Portfolio Loan?
We allow you to pay off, refinance or sell anyone or a number of properties with the Residential Portfolio Loan. The loan documents will have an allocated payoff amount or percentage within the portfolio of properties that would be specific to the property you requested.
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