How to purchase Several SFH at once

Question

I have come across an investor that wants to retire and head south.  He is selling off all of his properties, 34 total all SFH and all currently rented.  My questions are these, is it possible to buy all under one loan? and if so would it be a commercial loan?  If anyone has done such a transaction and if so please share your experience.

David Krulac · Answer

Craig  Parnacott

Your absolute first choice for financing should be the seller.  It is financially advantageous for the seller as well as the buyer.  For the seller, he can spread out his return to many different years and not pay Federal Income tax all at once up front.  He would be spreading out the tax liability.  Possibly in a lower tax bracket, and with cheaper dollars if there is any inflation.

You can make the situation a win win fora retiring owner, and beat the returns he would get from bank CDs, a likely place for hsi real estate proceeds to end up.

Jake Kucheck · Answer

You'll have more luck with a cash buyer on a multi-property deal.  Any debt this will be cross-collateralized is usually cash-out debt on performing properties, not purchase debt.

If the properties are in the right part of Ohio, I might be interested as a cash buyer.

Mike H. · Answer

It would definitely have to be a commercial loan.
Not sure if a local bank would touch something this big though. Depends on how big their local bank was. :-)

I would try looking into a mortgage broker that specializes in
commercial loans. They might be able to help you out.

I think your seller would have better luck selling them individually myself or maybe in blocks of 4 or 5 where they could split them up among investors. Might get better pricing too.

I'm sure thats not the cleanest break from ownership that the seller might want, but it might end up speeding up the sales process in the long run.

Again, financing is starting to open up too. So maybe someone might have something to help with that.

But my guess would be its not going to be easy to finance those.  Any chance he's in an area that one of the hedge fund companies is in? That would be the first door I knocked on to try to sell the group.

Mehran K. · Answer

I have never done such a transaction before but I have heard people talking about it here on BP. It's called a blanket loan and I'm not sure if lenders still do it these days. You MAY be able to find a local lender who would be willing to have this type of loan in their portfolio.

I suggest learning more about blanket loans and then calling up every lender in your city. Tell them about the opportunity you have, and see if they can help. There must be a lot of due diligence involved in such a transaction!

Does the seller own these properties free & clear or are they financed? You may try to see if the seller will carry the notes on the properties or a portion of them for you.

Good luck & keep us updated!