Purchasing Portfolios/Portfolio Lenders

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Purchasing Portfolios/Portfolio Lenders

Victoria SpagnoloPro Member
Investor · NY · Member since 2024 · 23 posts · 15 votes

Hello! An investor in the area is looking to offload his 5 property/9 unit porfolio used for student housing. I already have a a house that is rented to students in the area and the goal was always to scale, so I am very excited about this opportunity! The investor reached out to me directly and the portfolio is not currently on the market.  The portfolio consists of 4 duplexes and 1 single family home. 

I originally thought to propose seller financing on at least some of the properties (which I know the investor/seller would have been open to) but they all 5 properties currently have a mortgage so that likely wouldn't have been an option, correct? Specifically, I am thinking about the due-on-sale clause in the loan agreements. Is there a way around this and is it worth looking into deeper. I don't want to delay too much and lose out on this opportunity. 

Because of the mortgages, it appears to me that I will have to buy this all cash. Someone I met at a local BP event suggested a contact a portfolio lender who will look at the value of the portfolio as a whole. He said the lender will probably want to see some skin in the game (I believe he mentioned 20%. Does that sound right?). My plan would be to do a cash out refi on all properties to pay the lender back or use the rental income to make my monthly payments. The portfolio is valued roughly at $2.4, maybe even higher since these properties are often treated as commerical properties given the high rental income. I'd like to purchase for $1.8-2.0 (I know that the seller turned down an offer of $1.6 about a year and a half ago). The investor/seller is very anxious to get out so he may take below market value for a quick cash sale.  

Please let me know your thoughts and if you have any insight on how porfolio lending works and what these lenders typically look for. I heard that it could be difficult to get a loan from portfolio lenders. 

Thanks in advance!

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    8mo
    Quote from @Victoria Spagnolo:

    Hello! An investor in the area is looking to offload his 5 property/9 unit porfolio used for student housing. I already have a a house that is rented to students in the area and the goal was always to scale, so I am very excited about this opportunity! The investor reached out to me directly and the portfolio is not currently on the market.  The portfolio consists of 4 duplexes and 1 single family home. 

    I originally thought to propose seller financing on at least some of the properties (which I know the investor/seller would have been open to) but they all 5 properties currently have a mortgage so that likely wouldn't have been an option, correct? Specifically, I am thinking about the due-on-sale clause in the loan agreements. Is there a way around this and is it worth looking into deeper. I don't want to delay too much and lose out on this opportunity. 

    Because of the mortgages, it appears to me that I will have to buy this all cash. Someone I met at a local BP event suggested a contact a portfolio lender who will look at the value of the portfolio as a whole. He said the lender will probably want to see some skin in the game (I believe he mentioned 20%. Does that sound right?). My plan would be to do a cash out refi on all properties to pay the lender back or use the rental income to make my monthly payments. The portfolio is valued roughly at $2.4, maybe even higher since these properties are often treated as commerical properties given the high rental income. I'd like to purchase for $1.8-2.0 (I know that the seller turned down an offer of $1.6 about a year and a half ago). The investor/seller is very anxious to get out so he may take below market value for a quick cash sale.  

    Please let me know your thoughts and if you have any insight on how porfolio lending works and what these lenders typically look for. I heard that it could be difficult to get a loan from portfolio lenders. 

    Thanks in advance!


    Yes you could get a portfolio loan, but will need 20-25% down payment in cash and not from any type of financing or the seller. This is pretty common. Personally I would rather do a DSCR loan against each property to allow more flexibility. These would not be considered commercial though even if rented to college because they are single family and duplexes and values will be based on appraisal or income (lower of the two). So if its 1.8M each property will need to appraise for atleast that, which many realize college rentals do not appraise that high as they are residential properties - even if they provide great cashflow

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    • Victoria SpagnoloPro Member
      OP
      Investor · NY · Member since 2024 · 23 posts · 15 votes
      8mo
      Quote from @Chris Seveney:
      Quote from @Victoria Spagnolo:

      Hello! An investor in the area is looking to offload his 5 property/9 unit porfolio used for student housing. I already have a a house that is rented to students in the area and the goal was always to scale, so I am very excited about this opportunity! The investor reached out to me directly and the portfolio is not currently on the market.  The portfolio consists of 4 duplexes and 1 single family home. 

      I originally thought to propose seller financing on at least some of the properties (which I know the investor/seller would have been open to) but they all 5 properties currently have a mortgage so that likely wouldn't have been an option, correct? Specifically, I am thinking about the due-on-sale clause in the loan agreements. Is there a way around this and is it worth looking into deeper. I don't want to delay too much and lose out on this opportunity. 

      Because of the mortgages, it appears to me that I will have to buy this all cash. Someone I met at a local BP event suggested a contact a portfolio lender who will look at the value of the portfolio as a whole. He said the lender will probably want to see some skin in the game (I believe he mentioned 20%. Does that sound right?). My plan would be to do a cash out refi on all properties to pay the lender back or use the rental income to make my monthly payments. The portfolio is valued roughly at $2.4, maybe even higher since these properties are often treated as commerical properties given the high rental income. I'd like to purchase for $1.8-2.0 (I know that the seller turned down an offer of $1.6 about a year and a half ago). The investor/seller is very anxious to get out so he may take below market value for a quick cash sale.  

      Please let me know your thoughts and if you have any insight on how porfolio lending works and what these lenders typically look for. I heard that it could be difficult to get a loan from portfolio lenders. 

      Thanks in advance!


      Yes you could get a portfolio loan, but will need 20-25% down payment in cash and not from any type of financing or the seller. This is pretty common. Personally I would rather do a DSCR loan against each property to allow more flexibility. These would not be considered commercial though even if rented to college because they are single family and duplexes and values will be based on appraisal or income (lower of the two). So if its 1.8M each property will need to appraise for atleast that, which many realize college rentals do not appraise that high as they are residential properties - even if they provide great cashflow


      Hi Chris. Thanks so much for your response. I've been hearing that DSCR may be the way to go on this. My one obstacle may be coming up with the 20% on the DSCR loans (I guess this was also my obstacle with a profolio lender). I'm thinking I can do a cash-out refi on one of my properties located elsewhere, but let's assume I cannot come up with the 20% for the loan on all 5 properties. We'd probably do a select few for now. Is there a way I can lock in the others? As I mentioned, I'd really like to acquire all properties if possible as my goal is to scale. Someone mentioned negotiating a contract with the seller to agree to purchase all properties within X about of months. Am I biting more than I can chew?

      Also, regarding my comment about treating these a commerical properties - what I'm noticing is that when houses are on the market, they are priced at these higher price points based on heightened rental income (using the 1% rule) because it is student housing, as landlords charge per room. If you find a similiar house with the same number of bedrooms and bathrooms (a comp in all other respects) but located a few blocks north further from the university, it is priced and sold at way less. It's unforuntate that an appraisal for a DSCR loan won't value the student housing the same way and will look to non-student housing properties as comps.

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  • Pierre Guirguis
    Lender · Marlboro, NJ · Member since 2025 · 239 posts · 146 votes
    8mo

    This is a good opportunity, but you’re right to slow down and think through structure before rushing it.

    On seller financing, having existing mortgages does not automatically kill the idea, but it does complicate it. Most institutional loans have due-on-sale clauses, so a straight wrap or seller carry without lender consent is usually not realistic. That said, partial seller financing, a structured earn-out, or short-term seller notes paired with new debt can sometimes work depending on how motivated the seller is and how the transfer is handled.

    Portfolio lenders are a very real option here, especially given the unit count and student housing income profile. They will typically look at the portfolio as a whole, focusing on in-place cash flow, borrower experience, global DSCR, and liquidity. Twenty percent down is a reasonable expectation, though it can move depending on strength of income and your balance sheet.

    One thing to be careful about is assuming you can immediately cash-out refi everything after closing. Seasoning, valuation methodology, and how the lender classifies student housing income will matter a lot. In many cases, the better play is long-term portfolio debt with flexibility rather than planning an immediate take-out.

    If the seller is truly motivated, the biggest leverage here may be certainty of execution rather than price. Tight timelines and clean structure often win these deals more than squeezing another 50k off the purchase.

    Happy to share more if helpful!

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