How to secure finance for multiple rentals (10+)?

Question

Hi all,

seeing some investor has a portfolio of 200+ rental properties, I am wondering how does the financing work behind the scene? Personally, I have a really tough time securing finance at just 10 properties without having to resort to unreasonable interest rates.

I just started to go through the podcast here, feel free to link an episode if there are some good answers out there already.

I am based in Canada, but I'm sure the strategy would be similar.

thank you for your time.

Nick Belsky · Answer

@Patrick Kip

Just priced out a blanket with 10 SFRs today.  7.450% Par @ 80LTV or 6.850% Par @ 75LTV.  5 Year PPP, step down, 3 months reserves. 30 Year Fixed, no funny business in the loan.

Doing a blanket loan should not cost you much more in rate.  I rarely see them cost anything, if they do, its usually only a 0.25% or so.  If you aren't happy with the options you are finding then, find a mortgage broker to help you out!

Cheers!

Ned Carey · Answer

@Patrick Kip stop limiting yourself to lenders and programs with 10 property limits. There are tons of different types of lenders out there. Commercial loans or people like Lima on as mentioned above for example.

Stop worrying about interest rate, focus not on what you pay but how much you earn in return.

Gabe G. · Answer

Hello @Patrick Kip,

In the U.S. there are many national and regional lenders who are lending on SFH portfolios - the key is to find the ones who are. I'm not familiar with Canandian lending. It may be worth a call to Lima One Capital or Lending One (a subsidiary of Blackstone Capital) to get a lead on a lender in Canada doing the same type of financing.

All the best!

Gabe

Salvatore Lentini · Answer

@Patrick Kip  You need to find investor friendly lenders.  The ones I work with for my portfolio and others I help get funding, don't care if you have 10+ investment properties.  Actually, quite the opposite, you'll get better terms with them the more properties you have because you have experience and are considered less of a risk in their models.  Happy to put you in touch.

Zorya Belanger · Answer

Hi @Patrick Kip If an investor has 200+ properties, then I'm sure there are some multifamily properties in that portfolio, and they are likely not buying those buildings on their own. Could be multifamily syndications with active and passive investors, and a high net worth individual guaranteeing the loan. Behind the scene, it's just a commercial loan, and the property mostly qualifies for it. You can get pretty good interest rates as lenders see multifamily as the lowest risk asset after personal residences. In general, financing is the same in US and Canada, but lots of details are different.

Nick Vazquez · Answer

Hey @Patrick Kip, lots of good advice here, commercial loans would probably be your best bet.

Have you tried talking to a mortgage broker? A good mortgage broker should have access to many different types of lenders and products. For example, I know there are products in the US that look at the rental property income vs looking at your income for you to get the loan. I'm sure there are similar things in Canada as well and a mortgage broker should be able to help you find them.

You could also ask the investors you see that have 200+ properties how they fund their deals? If you know them personally that would be a good place to start, especially if they are in Canada too.

Patrick K. · Answer

mostly in Toronto, could you recommend some companies?

Camile Case · Answer

@Patrick Kip Portfolio Loans - min 2 properties, no max, interest rates start in the 6% range. Where are the properties located?

Patrick K. · Answer

Thanks for the answer, just curious, what type of rates can be expected from these lenders?

How to secure finance for multiple rentals (10+)?

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