How to Buy Properties in a Portfolio

Question

Good Morning All,

I live in Augusta, GA.... It wasn't on the list of locations for some reason.

I have an opportunity to buy 3 properties in a sellers portfolio. He is pricing them all together instead of separately. I've only bought one property at a time and I'm not sure how to buy 3 properties at a time with one selling price. He is selling the portfolio at $300,00 and he said that the price is negatable. All properties have tenants with rents being, $600, $650, & $900. I know that I could get more rent out of these properties, but before I run the numbers I'd like to learn how I would even get financing for something like this. Some of the questions I have are: Would I have to put 25% down per property or just 25% down for the total selling price? Would it be better to get a hard money loan for all the properties and then refinance the properties individually? I would ask for seller financing, but he told me that he is selling the properties to get capitol for a business opportunity, so I can only assume that he needs the lump sum of cash. I currently have 2 rental properties and would love to grow, but there are still many things that I need to learn, primarily from the lending side of things.

I appreciate any feedback and I look forward to hearing from you all.

Matthew Crivelli · Answer

@Clinton Fain

You can purchase more than one property at once with a portfolio loan. Typically the lender will require the individual purchase prices of each property to be listed on the purchase & sale agreement. (even if its only one contract)

The rents are REALLY low and if the portfolio loan is using a DSCR calculation (which many do) you could run into issues. IF it was me, I would tell the seller you want the properties vacant at closing, this way the lender can use MARKET RENT to qualify the loan & you would be able to pick your own tenants.

OR you could also purchase with hard money like you said, stabilize them yourself (get new renters, take care of deferred maintenance, etc..) and refinance individually or packaged.

This can be done & you have options, I would call around and have a few different lenders look at the properties and go over numbers with you!

Richard Capers Jr · Answer

@Clinton Fain

I agree with @Matthew Crivelli on how low the rents are and the difficulties you will have finding a DSCR lender. I invest in Augusta and believe you have a potentially good opportunity pending location. If you acquire the property vacant are the turns easy enough to get a team in and out quickly? Does the seller wants you to honor the current lease? Is the seller open to creative financing?

Cash offers have to be favorable to you and if you go the hard money route I don't know many lenders that will fund you if the portfolio value is anywhere near ARV. The seller knows this so look for a few ways to bridge the gap and make the numbers work for you long term.

How to Buy Properties in a Portfolio

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