The Quick Read: A portfolio sale under a two-year clock works when you read the note first, price the release and prepayment terms against your net proceeds, test what the remaining properties cover after each sale, and keep a refinance fallback alive in case buyers or closings slip past the maturity date.
- Find out what “two years” means on your note: a balloon maturity, an end to an interest-only period, or the end of a prepayment window.
- Look for a release clause. Without one, selling a single property out of a blanket loan can put the whole balance in play.
- Expect the release price to run above the amount the note allocates to the property.
- Check what the remaining pool covers after each sale, because the strongest properties often leave first.
- Treat selling as one of three exits, next to refinancing and holding, and compare the net proceeds of each.
What Does “Matures in Two Years” Actually Mean?
Two years out can describe three different situations, and each calls for a different plan. Before you list anything, pull the note and find out which one you have.
The first is a balloon maturity. A balloon note runs on a longer payment schedule than its term, so a lump sum comes due at the end. In Lendmire’s network, the rental portfolio term loan works this way. It covers five or more rental properties or units under one loan, with fixed-rate terms of 3, 5, 7 or 10 years and a balloon at maturity. If you hold one of these with two years left, the maturity date is a hard deadline.
The second is an interest-only period that ends. The 30-year portfolio DSCR loan covers 2 to 20 properties under one note, carries a 30-year term and schedule, and offers an interest-only period. It has no balloon. If that period is what ends in two years, the payment resets, but nothing falls due. Selling is a choice there, not a requirement.
The third is a prepayment window. Many notes charge a fee for paying off early, and the fee shrinks or disappears at a set date. Here, two years is the date when an exit gets cheaper.
Across the wholesale network, a blanket loan, a portfolio DSCR loan and a cross-collateralized loan all describe the same thing: one note secured by several rentals. A bank’s portfolio loan, meaning a loan the bank keeps on its own books, is a different use of the same words. Lendmire’s complete DSCR loans guide covers the basics if you are new to the product.
Key Terms Defined
Balloon payment: a large lump sum due at the end of a loan term, because the payments before it did not pay the loan off.
Release clause: a contract term that lets you pay off part of a blanket loan to free one property from the lien. It is a term in your note, not a legal right.
Release price: the amount the lender requires to release one property. It usually runs above the balance the note allocates to that property.
Yield maintenance: a prepayment charge based on the interest the lender would have earned, not a flat percentage of the balance. It behaves differently from a step-down fee.
Pooled coverage: the combined rent of the portfolio measured against the combined debt service, so stronger properties can offset weaker ones.
Assumption: a buyer takes over your existing loan instead of paying it off, with the lender’s consent.
Sell, Refinance, or Split?
Selling is one exit among three, and the right one depends on equity, coverage and how many properties you want to keep. A hybrid is common: sell the properties you like least and refinance the rest into a loan sized to them.
| Your situation | Usual best fit | Why |
|---|---|---|
| Pool covers well, equity is strong | Refinance and hold | No sale costs, no buyer risk |
| Pool covers poorly, equity is thin | Sell the weakest properties | Cuts the debt the pool must carry |
| Want out of the business | Sell the whole pool | One exit, one set of payoff terms |
| Some properties are great, some are not | Split: sell some, refinance the rest | Each loan is sized to its collateral |
| No release clause in the note | Full payoff or whole-pool refinance | A partial sale may call the entire balance |
A refinance is not a given. The CFPB notes that a balloon generally comes due after a 5 to 10 year term, compared with 15 to 30 years on a traditional mortgage. It also warns that falling property values or a weaker financial position can block a refinance when the balloon arrives. That advice is aimed at consumer mortgages. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The refinance risk is the same either way, though.
The Two-Year Timeline
Work backward from the maturity date. The calendar below is a planning guide, not a promise about how any sale or loan will move.
| Months before maturity | What to do |
|---|---|
| 24 | Pull the note. Mark the maturity, prepayment and release terms. |
| 18 | Rank each property by rent coverage and equity. Decide sell, keep or refinance. |
| 12 | Order a payoff or release statement for each property. Assemble the buyer package. |
| 9 | List or approach buyers. Line up the refinance option for the properties you keep. |
| 6 | Have the refinance fallback ready in case a sale slips. |
| 3 | Confirm closing dates against the maturity date and the prepayment window. |
The earlier you start, the more choices you keep. A seller near a public deadline gives buyers leverage. In the investor forums, one seller who packaged three rentals reported only breaking even and felt the buyer got the better deal.
Reading Your Note: The Clauses That Decide Everything
Read four clauses before you call a buyer or a broker. Each one changes how a sale works.
| Clause | What it means for a sale | What to ask |
|---|---|---|
| Release | Lets you pay off one property to free it | Is there a release price, and how is it set? |
| Prepayment | A fee for paying off early | Does a sale trigger it, and when does it end? |
| Assumption | A buyer may take over the note | What does consent require, and what fee applies? |
| Cross-collateralization | All properties secure one balance | What happens to the pool when one leaves? |
For the rental portfolio term loan, prepayment is typically yield maintenance. In the network’s term structures, that charge typically runs for 54 months on the 5-year note and 114 months on the 10-year note. A shorter, flat step-down charge works differently, so do not assume the two are interchangeable. On the 30-year portfolio DSCR loan, the prepayment terms depend on the specific note, so read yours.
For partial releases, substitutions and selling one property out of the pool, the loan documents and the lender’s release terms govern. The remaining portfolio must still cover its debt service. That last sentence matters more than most sellers expect.
Pricing the Exit: Net Proceeds, Property by Property
Run the same formula on every property before you decide anything.
Net proceeds: sale price, minus the release or payoff amount, minus closing costs, minus any prepayment charge.
The release price is the part sellers underestimate. It runs above the property’s allocated balance, so selling one property pays down more debt than its share of the loan. That is usually good for the lender’s remaining collateral and bad for your cash. Ask for the release price in writing before you price the property for sale.
Then test the leftovers. Say you hold four rentals in a pool and sell the two best performers first. The two you keep may not cover the remaining balance. On the 30-year portfolio DSCR loan, coverage is measured on the pool against a 1.00 floor. A rental below 1.00 can sit inside a pool, but underwriting tests the pooled coverage, the leverage and the terms, so one weak property is workable only while the rest of the pool carries it. Clearing 1.00 also does not mean positive cash flow. DSCR compares rent to the full monthly obligation, and repairs, vacancy, management and capital costs sit outside it.
A practical point from files like these: the properties that look safest to sell first are often the ones propping up the pool. Run the numbers on the remaining collateral after each planned release, not only on the first sale.
How Will Buyers Underwrite Your Portfolio?
Buyers price a portfolio from the rent roll backward. They want leases, the operating statement, proof of deposits and, often, a walk through every unit. Sellers who package the portfolio as one investment tend to do better. A BiggerPockets discussion on selling rental portfolios recommends an offering memorandum backed by historical financials.
Expect a narrow buyer pool for average scattered portfolios. One investor who bought 41 properties describes how small investors can’t handle the size while institutional buyers prefer larger portfolios in nicer areas. You may need to discount to move the package as a whole.
Pooled numbers can hide weak properties, and a buyer will find them. Know which of your rentals have vacancy, deferred repairs or below-market leases before the buyer does. Fix what is cheap to fix and disclose the rest.
Whole Portfolio or Property by Property?
You have three structures. Each trades price against control and against the maturity deadline.
- One bulk contract. One buyer, one contract, one payoff. This is the cleanest fit for a hard maturity date, and it can be treated as a single exchange if you use a 1031.
- Staggered closings. A buyer may ask to split a large purchase into several closings. BiggerPockets describes one 41-property buyer who split the deal into four.
- Sequenced single sales. You sell property by property under the release terms, and the lender may retest the pool each time.
| Sequence | Upside | Risk |
|---|---|---|
| Weakest first | Pool coverage improves as weak units leave | Buyers may pay less for weak units |
| Strongest first | Higher prices, fast cash for the rest | The remaining pool may fail its coverage test |
Weakest first is usually the safer order under a release clause. The strongest-first order can work if the pool has coverage to spare, but test it before you commit.
Can a Buyer Take Over Your Loan?
Sometimes, but rarely. On the rental portfolio term loan, the network allows a one-time purchaser assumption on loans above $5,000,000, subject to underwriting and an assumption fee. Below that size, assumption is on an exception basis. Lender consent is required either way, and the buyer must qualify.
For most portfolios, plan on a payoff. Treat an assumption as an upside if the lender agrees, never as the plan itself.
If the Clock Runs Short
If a sale slips, a refinance on the properties you keep is the fallback. Lenders in the network generally run refinances on the same pooled test, so you need coverage on what stays. Typical program ceilings, subject to lender guidelines, look like this:
- The 30-year portfolio DSCR loan allows up to 80% of value on a rate-and-term refinance, with loan sizes from $300,000 to $5,000,000.
- The rental portfolio term loan allows up to 75% of value.
- Cash-out on a portfolio never goes above 75% of the pooled value.
- The credit floor on the portfolio programs is 640, with 680 or 720 on some structures. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
A common workaround is to refinance the property you plan to keep into its own loan before you sell the rest. Individual loans carry no release price and no retest. Confirm it works with your note and the new lender’s guidelines first.
If you refinance, structure the new loan with the next exit in mind.
Tax Timing Before You List
If you plan a 1031 exchange, the IRS sets two clocks. Per the IRS instructions for Form 8824, you must identify replacement property within 45 days and receive it within 180 days, or by the tax return due date if that comes first. The 45 days sit inside the 180, and weekends and holidays do not extend either deadline. Because those clocks run beside your loan deadline, set the sale date with both in mind. Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Can I sell just one property out of a blanket DSCR loan?
Only if the note has a release clause. With one, you pay the release price, which runs above the property’s allocated balance, and the lender releases its lien. Without one, a partial sale can put the entire balance in play.
Does selling avoid the prepayment charge?
Not automatically. A sale pays off the loan, and many notes treat that as a prepayment. Some structures exempt a sale, so read the note and ask the servicer before you list.
What if I can’t refinance when the balloon comes due?
Your options narrow to selling, negotiating an extension with the lender, or paying off with other funds. This is why the refinance fallback should be tested well before maturity. Lender approval of any extension is never certain.
Does the 30-year portfolio loan have a maturity problem too?
It has no balloon, so nothing falls due at the end of an interest-only period. The payment simply resets. The balloon risk belongs to the rental portfolio term loan.
When should I start planning a sale?
Start with the note review about two years out. Early work leaves room to sequence sales, repair weak properties and line up a fallback. Rushing near the deadline hands the buyer the leverage.
Next Steps
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. As a mortgage broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C., Lendmire can also help you test a refinance fallback before you list. Qualification is subject to lender guidelines and is not a commitment to lend.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. CFPB – What is a balloon payment?
2. BiggerPockets – Best Way to Sell Rental Portfolio
3. BiggerPockets – How We Purchased a Portfolio of 41 Properties
4. BiggerPockets – How to Buy Multiple-Property Portfolios
5. IRS – Instructions for Form 8824
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Portfolio DSCR Loan Save Money Over One Loan per Rental? · Can a Portfolio DSCR Loan Get You Past the Conventional Loan Cap? · Portfolio DSCR Loan vs. a DSCR Loan on Every Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.