Looking at purchasing a portfolio of 17 units

[Cade Antonucci]

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

[Erik Estrada]

Might want to look into portfolio financing or a blanket loan. As long as each property debt covers you will qualify. Typical downpayment required is 25%. No DTI required.

[V.G Jason]

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

 Isn't that the kind of stuff that would tell you if it would make sense?

How are you able to say everything makes sense without those aspects?

[Cade Antonucci]

Quote from @V.G Jason:

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

 Isn't that the kind of stuff that would tell you if it would make sense?

How are you able to say everything makes sense without those aspects?

 I pulled an estimate out of my *** for an interest rate at basically a 20% down payment option and the cash flow was more than sufficient to cover my fake scenario. The rents are good for the price, so just looking to see if my estimate matches the reality of what I would get as far as financing to keep moving forward in the process. 

[Cade Antonucci]

Quote from @Erik Estrada:

Might want to look into portfolio financing or a blanket loan. As long as each property debt covers you will qualify. Typical downpayment required is 25%. No DTI required.

 Thank you for the information! 

[V.G Jason]

Quote from @Cade Antonucci:

Quote from @V.G Jason:

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

 Isn't that the kind of stuff that would tell you if it would make sense?

How are you able to say everything makes sense without those aspects?

 I pulled an estimate out of my *** for an interest rate at basically a 20% down payment option and the cash flow was more than sufficient to cover my fake scenario. The rents are good for the price, so just looking to see if my estimate matches the reality of what I would get as far as financing to keep moving forward in the process. 

Fair enough

[Stephanie P.]

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

Doing them as a DSCR loan so no debt ratio per se, but they have to cash flow 120% to work. Typically 75% would work, but an option would be to do some of them as individual properties so if you ever wanted to sell some, you're not bound by the portfolio. If they were done individually, you could go to 80% and possibly 85% loan to value, but a lot depends on the cash flow.

[Jonathan Taylor]

@Cade Antonucci there are DSCR based lending options for portfolio lending but the numbers of the current portfolio (current rents) would be used to help qualify you for this loan. @Stephanie P. is correct that cash flow needs to be about 120% to work. In this market, I am not seeing full LTV (usually 80%) for purchases. As long as you conservative, as in 70-75% LTV on purchase, you should be okay but without the other info (rental roll, vacancy, Taxes, insurance, etc), we can't help with the numbers.

Short answer, portfolio lending is a cost effective option for purchasing 17 units. 

[Caroline Gerardo]

Location, property type, market value, your FICO, market rents, condition, your long and short term plans, do you plan to ever sell one?

There is no one cure all. If you type out the details lenders can give you numbers. 

Doing one blanket loan might be easy if these are small deals, but then you are stuck keeping them as one or paying fees to release one to sell.

If you already have conventional non owner loans closed in 2022 you know the drill- get the pdf's organized and discover what best pricing is out there. 

Keep notes, compare and decide

Assume someone selling 17 units they are distressed.

[Jason Bott]

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

You will want to get an accurate insurance premium so it doesn’t blow up the deal at the last minute.  Items to consider;

1) chances are the limits of insurance the seller is carrying ate lower than what your new loan will require.
2) Insurance premiums are up 10-15% year over year with increase building costs and inflation.

[Dylan M. Davis]

Bridge financing for 1-30 units would be the best bet. Need an asset-based approach that will just look at the property and qualify based on its financials. No income check. Probably looking at 20-25% down + closing costs. 

[Heith Reade]

Quote from @Cade Antonucci:

I am currently analyzing the purchase of 17 units from another real estate investor. Looking over the numbers, everything makes sense and I would like to go forward looking for financing. This would be the first time I would purchase multiple units at one time, Before I only have purchased single family homes one at a time. What kind of financing should I be looking into? What kind of down payment will i be looking at? What do I need to show as far as income and debt to equity ratio? I would appreciate any help this forum can offer! 

I'd have to second what most have already shared. The best way to acquire is through a non DTI based loan product such as DSCR (Debt Service Coverage Ratio). I believe I saw a post explain previously how they calculate the DSCR number. You'd have to consider your long term goal for the totality of the props as it pertains to how you will finance them. You could do multiple blanket liens and carve them into tranches, if there are props you think you'll be selling in the near future you could finance them outside of the blanket liens, or of course you could do 17 individual loans but if you do that I HIGHLY suggest working with a lender that can do all 17 without having to broker you to 4 different investors.

[Dave McIntyre]

Hi Cade,

In case it can help, you might also consider unsecured funding. Funds can be used for working capital, down payment or gap funding, as well as 100% funding of a purchase. These can also report to your business credit and therefore not show on your personal credit.

Be happy to connect.

Best,

Dave