What are the chances that I could buy 7 rental properties at once?

10 Replies

I don't own any rentals yet but I have been connected with another investor that is wanting to somewhat retire and sell properties from his portfolio.  I don't have all the specifics yet on the properties (I don't even know what he is asking for them yet), but I have the addresses and they are all within the area I'm looking.  These are all off-market properties. There are 7 properties.

Since I don't currently own any properties yet, and if he is willing to sell at a good price, is there any chance I can go to a bank and get financing for 7 properties all at once?  I do have a good paying w2 job and good credit but I don't have rental property experience.  I'll be able to put a down payment of possibly 20% (just a rough estimate since I don't know the price yet).

I really like the idea of jumping in with 7 properties at once instead of one by one; especially if these are great deals then I want to take advantage of the opportunity.

Am I smokin' somethin' thinking I will be able to purchase these properties as my first rental properties?

I think there would be a good chance for some owner financing options if I can't work it all out with a bank.

Once I get the details I will post in the "deal analysis" forum.

MODERATOR: THIS IS NOT A REQUEST FOR LENDERS.  PLEASE DO NOT ADVERTISE LENDERS HERE.

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Thanks Joel, I'll look into them as well.

Hello David,

This is absolutely possible with conventional financing.  You can do this through Fannie Mae and it would need to be put together as follows.

Example:

Say each home was selling for 100K and you're putting down 25% on each one. 

75K at 4.75% = $391.24 and let's say taxes and insurance bring the payment up to $550.

Lease agreements are all at $750 and you can use 75% of this income immediately.  So $562.50 - 550 = $12.50 x 7= $87.50.

If you're making 2K per month now you can show $2,087.50, I know this example doesn't show a lot of income but plug in your numbers and see what you come up with.  This calculation is used because you don't have any schedule E income.  If you did it would be a different calculation.

Debts / $2,087.50= your DTI which is a large factor in conventional and government loans. If it comes in less that 43% that is a safe number. However I've seen and have loans that are currently approved at over 47%. Remember that your debts are only those that show on your credite report. Credit cards, Car notes, mortgages, personal loans etc.

I hope this all helps and HMU if you need anything in the future :)

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I think that traditional financing may prove to be the most expensive option here. You may consider asking the seller to carry the mortgage for you. They can get a good 6% interest on the monthly payments that you'll be making to them so they are still making money monthly without any work! It they are retiring this could be a viable solution for the both of you.

You could utilize this strategy on a handful of the properties and just refinance them as the capital becomes available or pull equity out of the other properties as you get the deeds aged under your name.

There are allot of different ways to do this, but my advice is to spend the least amount of your money upfront and keep something of a nest egg in case something needs repairs right away!

Congratulations on this amazing deal! Don't give it up without a good fight!

Originally posted by @Gualter Amarelo :
I think that traditional financing may prove to be the most expensive option here. You may consider asking the seller to carry the mortgage for you. They can get a good 6% interest on the monthly payments that you'll be making to them so they are still making money monthly without any work! It they are retiring this could be a viable solution for the both of you.
You could utilize this strategy on a handful of the properties and just refinance them as the capital becomes available or pull equity out of the other properties as you get the deeds aged under your name.

There are allot of different ways to do this, but my advice is to spend the least amount of your money upfront and keep something of a nest egg in case something needs repairs right away!

Congratulations on this amazing deal! Don't give it up without a good fight!

Great post - see if the seller wants to continue to receive payments (they are accustomed to monthly rent by now).

Possible option -> current owner to carry the Note/paper for 75 – 80%.

You come in with 20 – 25 %.

Possible term 6 to 10 years ( balloon payment ) <-- refi within 60 to 68 months

Nice terms 4 – 8%

( This possibly will keep your DTI down )

Important: only if properties are Free and Clear ( no current debt )

Get each property inspected.

Run the numbers through biggerpockets forum.

Work with an attorney or RMLO specialists. ( avoid Dodd Frank issues )

Great ideas.  thanks everyone.   So I have hope!

Having the seller carry would be the best way to go.  Once you control and stabilize the properties refinance with a commercial lender.  I think it's much easier to refinance the seller debt than to purchase.


Frank

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