Can I buy multiple properties under one mortgage?

24 Replies

The area I am interested in buying has SFH that are $50k and less. I have heard on here that those are considered really small loans and some banks won't give a mortgage on them.
We have $30k to use this year to start investing. Because of this, I thought perhaps I can get a few homes and have them operate under one mortgage. Is this possible? Is there a name for it?

Of course, the other idea is to just buy a multi-family property. I can find multi-family properties in the area for $150k or less.

This would be our first rental property and I just want to analyze what the best course of action to take is.
Any tips/advice appreciated!

That is a blanket mortgage and is not offered on residential mortgages. You would need separate loans. This is the reply i got from my mortgage person who i work with.

@Ravi Rai is correct it is a blanket loan and is a commercial loan product. However you can get commercial loans on residential(1-4 unit) properties. This is usually what investors that are beyond the fannie/freddie loan guidelines have to move into, and just yesterday a member was talking about purchasing 42 SFR units using a blanket loan. The difference is going to be higher interest, lower LTV, and shorter term most likely. You'll need to talk to commercial loan brokers to find out what they might be able to offer you in terms of loan products.

Thank you both for the replies.
So what do people do that want to buy sub-$50k SFH? Is it all cash only in that case? I know people that are buying their actual residence in that area aren't paying cash, they are getting loans. Is it as easy for an investor to get one at that price-point too?

I should mention that we currently do not own any rental property, but want to in the very near future.

Originally posted by Hans Restuccia:
we do it all the time!!!! The answer is yes!

What are the typical requirements? Is it a much higher rate or shorter loan period?

We bought our properties with residential loans until recently. Residential you can only have 1 house for each loan, they have better rates than commercial and the same 15 or 30 year length as normal loans. It's up to your bank on $ amount. All of mine are in the $15,000-$25,000 range.

I'm just closing in my first commercial loan. We have 2 properties under one loan, its a 15 year payoff with an adjustable rate mortgage every 5 years.

@Therese V. - the bottom line is that you will have to call several conventional lenders to find the ones that will make <50k loans. They definitely are out there, in every market, so don't worry about that. You can buy your first few investment properties with 20% down, so a 50k purchase would involve a 40k loan, should be no problem as long as you have decent credit and debt-to-income ratio that is reasonable (35% or less would be good since you'll initially have to absorb the entire PITI of the rental property loan in the "debt" of your ratio, and 40-45% is typically as high as banks want to go.).

The PITI on a 40k loan should only be around $300, depending on taxes in your area, so add that to your current monthy debts, then divide by your gross mthly income. If this ratio is 40% or less, you should be fine, might even be OK up to 45% with stellar credit (740+). If you want to buy two or three homes, then just add those payments in as well, and see where your DTI ratio comes out. Hopefully both your credit scores are 700+, preferably 720. It gets more challenging if you dip below 700.

@David Beard thanks for that bit of analysis, if we added $600 to our monthly debt payments (just the mortgage on our home) that would bring us to around 29% DTI ratio. I'm going to be calling a credit union mortgage officer to see what my options are there for these lower loans.

Originally posted by Ben Savage:
Elizabeth, What lender are you using?

I don't have a lender yet, that's why I'm asking.

Originally posted by @Hans Restuccia :
we do it all the time!!!! The answer is yes!

I am eligible for a VA loan (upwards of 250k) and a friend told me I could use this to purchase 3-5 SFR under one VA loan as long as one of the properties would be my primary residence. Is there any truth to this?

Loans that are guaranteed by the Veteran Affairs (VA), much like FHA loans, are backed by the federal government (Ginnie Mae). The guarantee can apply from single to multifamily residential property, in other words you can purchase up to a quadriplex if you do currently reside in one of the units. You are absolutely right. A VA loan is a great way for you to obtain advantageous financing if you're currently renting and don't have too much of a down payment. I guess the next step is to find a qualified agent to do some research for you and point you in the right direction. If you have any questions about VA financing, please don't hesitate!

Originally posted by @Therese V. :

The area I am interested in buying has SFH that are $50k and less. I have heard on here that those are considered really small loans and some banks won't give a mortgage on them.
We have $30k to use this year to start investing. Because of this, I thought perhaps I can get a few homes and have them operate under one mortgage. Is this possible? Is there a name for it?

Of course, the other idea is to just buy a multi-family property. I can find multi-family properties in the area for $150k or less.

This would be our first rental property and I just want to analyze what the best course of action to take is.
Any tips/advice appreciated!

 Depending on your local lenders, this blanket or commonly referred to as a "cross collateral," loan is generally only offered by portfolio lenders or business/commercial banks. 

In CA I know of multiple banks that do this type of product to varying degree's. Perhaps you can network or call all the local banks to get some information on this.

Small local banks and credit unions.

If you want build a decent sized rental business you'll find that mortgage brokers are pretty much useless to you. You'll quickly outgrow the box they need you to fit in.

@Ben Savage

Keep in mind that these types of lenders like to lend mostly on properties that are local to them. Your best bet to find a portfolio lender is start visiting/calling small local banks in the area you are investing in.

If I use all private lender money to purchase a rental property, can I then get a mortgage from a bank further down the road to lower my payment. Would they look at it as if I have full equity and give me the highest amount possible. Thanks. chris Shaw

@Christopher Shaw Yes you can refi out of the property, pay off your PL. The bank will most likely offer you up to 95% LTV of the property's current market value. Will it lower your payment? That depends on the rate you have now vs what the bank offers you and the term. Hope that helps.

This is for Breynan. Why wouldn't the refi loan be less in interest then a private lender. If a private lender is around 10%, wouldn't the bank be in at 6% or so. Thanks for answering my questions. chris

@Christoper Shaw - yes you are correct if your PL is at that rate but what if the PL is an equity partner. 

Personally, I look at what the debt is going to cost me each month. It has to fit with my goals or exit strategy. 

Hope that helps. 

@Breynan Hammons would the bank want to see my w-2's? I left my job in July of 2017. I have a full w2 for 2016. I started an LLC in July 2017 taxed as an S Corp. I'm also wanting to use hard money then refi

Hello, I am considering purchasing a two 4-plex which are next to each other (same owner) and would like to obtain a commercial loan. They each have their own address and lot, not sure if this makes any difference. Is this any different than purchase multiple SFR's under one blank loan. Or can this be seen as an 8 unit property by commercial banks?

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