Financing for Multiple 50k Properties

6 Replies

I have a number of properties I purchased cash in the last year for around 50-70k each in North Carolina that are currently rented at market rents. I need to find financing for them and I don't want to use my conventional slots. What is the best route in this scenario? Most lenders i see have a minimum loan amount. What is the best route for these small properties? Bundle them together and portfolio cash out refinance? Properties may appraise for more than what i bought them for but i am not relying on that avenue. 

I you mean you paid only cash and you used zero financing of any kind then so u have the deed and just wanna pull cash out you can put multiple properties into one portfolio loan which is an option. there are also hard money lenders that will refinance for u and carry the loan at a higher interest rate. The best option is to use your conventional loans for the best rates and fees 

@Trevor F.

Plenty of lenders out there who offer DSCR/long-term loans to help you borrower against these types of assets with lower loan amounts so you don't have to use the conventional/conforming spots. Do you own these in an LLC or some type of entity? What City in North Carolina?

@Trevor F. yes financing lower value investment properties can be a challenge. You can find lenders who will put multiple properties in a single loan to meet minimum loan amounts. It was common in baltimore for landlords to have 20+ properties on 1 loan.

It might take some looking but they are out there. That should be your opening questions; "What is your minimum loan size?" or "Can I bundle multiple properties into one loan to meet minimum loan requirements?"

@Trevor F.   I would probably try to find a local bank that will finance them, in bulk, using a commercial loan. I've always called a mortgage secured to more than one property a "blanket" mortgage.

I'm a residential lender, so I also want to comment on this part of your initial post: 

I don't want to use my conventional slots.


When financing a second home or investment property conventional conforming (Fannie/Freddie) guidelines allow you to have up to 10 financed 1- to 4-unit residential properties. Under this guideline, lenders tally properties, not loans (and not doors). Let's say you own your home with a mortgage and package up 9 single-family rentals under one commercial loan -- you may only have 2 loans, but you have 10 financed residential properties. 

If you want to preserve your conventional conforming loans for other transactions, I would suggest (if you've not already) forming an LLC, transferring ownership to the LLC, sign for the new commercial blanket mortgage as a member of the LLC.

A really finnicky underwriter might read the promissory note and, if you are personally obligated on the loan, still count the properties as part of your 10 max. In the real world, I've not seen underwriters split hairs in that way. 

As added insurance, I would recommend filing a separate tax return (probably a 1065 partnership return) for the LLC, even if it's a single-member and not technically required to file a tax return. You want to create as much of a separation between you and the LLC as possible.

When you apply for another residential loan for a rental or second home, you'll be able to show that the properties are owned by an LLC with financing in the name of the LLC and an underwriter should excluded from your 10 loan limit. 

You can read up on the actual guidelines HERE if you want further clarification.

 Good luck with your search for a good lending source!

Originally posted by @Julee Felsman :

@Trevor F.  I would probably try to find a local bank that will finance them, in bulk, using a commercial loan. I've always called a mortgage secured to more than one property a "blanket" mortgage.

I'm a residential lender, so I also want to comment on this part of your initial post: 

I don't want to use my conventional slots.


When financing a second home or investment property conventional conforming (Fannie/Freddie) guidelines allow you to have up to 10 financed 1- to 4-unit residential properties. Under this guideline, lenders tally properties, not loans (and not doors). Let's say you own your home with a mortgage and package up 9 single-family rentals under one commercial loan -- you may only have 2 loans, but you have 10 financed residential properties. 

If you want to preserve your conventional conforming loans for other transactions, I would suggest (if you've not already) forming an LLC, transferring ownership to the LLC, sign for the new commercial blanket mortgage as a member of the LLC.

A really finnicky underwriter might read the promissory note and, if you are personally obligated on the loan, still count the properties as part of your 10 max. In the real world, I've not seen underwriters split hairs in that way. 

As added insurance, I would recommend filing a separate tax return (probably a 1065 partnership return) for the LLC, even if it's a single-member and not technically required to file a tax return. You want to create as much of a separation between you and the LLC as possible.

When you apply for another residential loan for a rental or second home, you'll be able to show that the properties are owned by an LLC with financing in the name of the LLC and an underwriter should excluded from your 10 loan limit. 

You can read up on the actual guidelines HERE if you want further clarification.

 Good luck with your search for a good lending source!

Is there a benefit in having the properties mortgaged with conventional financing and then going to a commercial lender for a blanket loan? Besides the conventional loan limit problem i thought i could avoid paying fees twice by buying cash and eventually finding the blanket loan for the multiple properties. I suppose the difference would be a refinance vs a cash out refinance but I don't know if that is a significant difference.

Hi @Trevor F. ... I can't think of any benefit to getting a conventional loan and then refinancing to a blanket mortgage. Fewer loans = fewer loan costs.