Financing on several small properties

5 Replies

I'm new to rental investing. All I've done before is buy the home I'm in and paid cash for a second rental house. So I don't have a lot of experience with mortgage lenders.

I'm looking to make a deal on a several properties from the same seller. The total amount of the deal is around $500,000. I am able to provide a 20% down payment.

I have the understanding that traditional mortgage lenders usually don't write loans for small value properties. Does anyone know what the best way to get a single loan to cover the whole deal?

@Corey Slate

I would first off contact local banks and credit unions then I would speak to several mortgage brokers in regards to a portfolio loan. We just purchased a portfolio and a portion of the portfolio was 27 units which consisted of 3 and 4 unit properties and we were able to get non-recourse Fannie Mae financing which will most likely not be available to you since it was a loan over $1mm. This being said, there are portfolio lenders out there. If you are able to increase the portfolio to over $1.25mm in the future, you can then refinance the entire portfolio with great rates and terms.

@Corey Slate Here’s where your loan becomes a little harder to place. Some portfolio lenders require a minimum loan amount of $500k, not purchase price. Many also require a minimum property value of $75k. There are exceptions to these conditions, but they are harder to find and usually have a slightly higher interest rate then say a $1M portfolio loan with a minimum property value of $100k.