Rental Property Investor · Livermore, CA · Member since 2019 · 77 posts · 23 votes
Hello group!!!
I’m looking for some advice. If I own a portfolio of single family homes under one commercial loan. How/can I sell each property off individually until I pay off the loan entirely? Is this possible and or can it be done?
Rental Property Investor · Charlotte · Member since 2021 · 6 posts · 2 votes
4y
Yes, you can sell off individual residential properties that are under a single commercial loan. I recently closed on a deal for 8 residential properties with a single commercial loan and will be selling individual properties over the next couple of years, and the loan structure is important to get right.
There are two ways to set up a commercial loan for multiple residential properties: separate mortgages for each property or a single mortgage for all properties. I suggest the former if you plan to sell individual units. By having separate mortgages for each property, you simply would need to pay the mortgage for the property that is sold to reduce your overall loan balance. If you have a single mortgage for all properties then each property will be accountable for a % of the portfolio loan. When you go to sell a unit, you will need to do the math to rebalance your portfolio and understand loan paydown - the added complexity likely isn't worth it if your strategy is to sell individual properties that are included under the same loan.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
4y
You need to talk to your loan originator. I’m more than positive they would let you sell a property if you gave all the proceeds to them as long as the net sale was higher than the value they assessed to it when borrowing you the money. This should be your worst case scenario, best case they assigned a percent of the total loan to each property.