Loan Options for a Portfolio low value (35K) SFR's

7 Replies

Does anyone have any good lending options for lower end price point, section 8 rentals.

I have a small portfolio of 6 or 7 SFR that I'd like to acquire, they don't work for a number of lenders as the value on the occupied properties is 35K each. The other properties in the portfolio will be 45-50K after rehab.

If I recall, there was a well known commercial lender who would do this, but can't remember which one... 75% LTV in a commercial loan, rates around 5% with 30 year amortization... also can't recall if it was recourse or non, this needs to be non recourse unless I bring in a money partner on the deal.

https://www.biggerpockets.com/calculators/shared/1519941/dc793f40-3751-4fc0-a7e4-c271882f2c22

Pretty much any commercial lender will do a portfolio loan like this. Any loan you do with a professional (non private) lender would almost guaranteed, have to be recourse.  Why would anyone want to give you that much money if you are not willing to personally guarantee you will pay them back, especially when you are asking them to use a bucket of crap properties that they don’t want to have to try to unload for collateral? (Granted, I would love your bucket of crap properties just as much as you do, but most bankers don’t love the low end rentals.)   I have been self employed almost all my adult life and every loan I’ve ever taken out - and every commercial lease I have ever signed - I have gladly personally guaranteed, because I have never defaulted on any loan and never plan to.  All the regional banks in my market are lending for real estate, as long as you are credit worthy, have a debt to income ratio within their guidelines, and meet whatever their other loan criteria is.  I can get a 75% loan to appraisal with no money out of pocket, but only if the properties are already leased.  If not, we have to do short term money and refi out to the portfolio loan once they are leased.

Clean credit.
My funds are coming from SD IRA money, so any loans secured must be non recourse, it's the nature of the beast.
I too pay all my bills, held onto a property that I was upside down on that we could have walked away from when the market crashed.... 

This portfolio is fully leased, at under market rents and the numbers still math out... that's why I'm trying to make it work.

Originally posted by @Patti Robertson :

Pretty much any commercial lender will do a portfolio loan like this. Any loan you do with a professional (non private) lender would almost guaranteed, have to be recourse.  Why would anyone want to give you that much money if you are not willing to personally guarantee you will pay them back, especially when you are asking them to use a bucket of crap properties that they don’t want to have to try to unload for collateral? (Granted, I would love your bucket of crap properties just as much as you do, but most bankers don’t love the low end rentals.)   I have been self employed almost all my adult life and every loan I’ve ever taken out - and every commercial lease I have ever signed - I have gladly personally guaranteed, because I have never defaulted on any loan and never plan to.  All the regional banks in my market are lending for real estate, as long as you are credit worthy, have a debt to income ratio within their guidelines, and meet whatever their other loan criteria is.  I can get a 75% loan to appraisal with no money out of pocket, but only if the properties are already leased.  If not, we have to do short term money and refi out to the portfolio loan once they are leased.

This has definitely been a tricky one!  I'll reach out.  Thank you!


Originally posted by @Tim Johnson :

most have a loan min of 500k on blankets your going to have to look hard for non recourse.

Check with @Eric Veronica

Checked them out.  Thank you!
Looks like the won't fund a rehab, and need a larger down.  
I'll have to rerun with their criteria & fees... see if it works... 



Originally posted by @Patti Robertson :

@Tania Reuben - Got it! I buy in my SD IRA too, but haven't done any non-recourse loans yet. Have you tried this lender? I don't see anything that says they manage a minimum loan amount.https://www.nasb.com/lending/s...